Private Markets Review – Q2, 2025
The second quarter of 2025 was defined by an interplay of inflation, divergent central bank policies, and persistent trade tensions. The U.S. Federal Reserve held its policy rate steady at 4.25%–4.50%, delaying expected rate cuts due to the potential risk of core CPI rising by year-end due to tariff-induced supply shocks. This contrasted with the European Central Bank, which began easing rates. Globally, rising trade frictions have increased stagflation risks and market volatility, forcing a greater focus on domestic demand in economies like Germany and China.
Against this backdrop, private markets demonstrated a degree of resilience through robust M&A and secondary market activity, even as the IPO window remained selective. There were a handful of IPOs that performed exceptionally well (Circle, Coreweave and eToro), raising expectations that more companies would consider going public given strong indications of investor demand. Investors prioritized high-quality assets in resilient sectors, demanding valuation discipline and a clear path to profitability. IPO activity picked up in the U.S. during the second quarter, with a total of 91 IPOs, peaking at 34 in May 2025.
US Stock Market IPOs by Month1:
The Private Markets Boom
As liquidity improves and a backlog of exit activity begins to clear, private markets could grow to almost $30 trillion by 2033, from $15 trillion in 2023, according to Preqin, with private debt and infrastructure leading the way.
Global Private Capital Poised for Growth2:
Exits have rebounded
Exit activity rebounded notably in 2025, reaching $117 billion by June meaning the annualized exit values reached $233 billion, driven primarily by a resurgence in IPO and M&A transactions. This represents a significant recovery following several years of reduced exit values post-2021’s peak.
Exit Value by Type ($B)3
Additionally, venture funding demonstrated remarkable momentum, especially in artificial intelligence (AI), with AI-related investments accounting for over half of total venture capital deployed year-to-date in 2025. The robust allocation toward AI underscores growing investor conviction in the sector’s transformative potential and strategic importance as non-AI dollars deployed decreased.
Dollars Deployed in Venture ($B)4
AI remained the dominant sector in both private and public markets. Investor demand for AI-driven companies surged, with applications spanning healthcare, logistics, and enterprise software. The sector’s versatility and innovation have driven impressive funding rounds and a wave of IPOs.
The Opportunity in AI
AI has reached a significant consumer tipping point, with 61% of American adults having used AI tools in the past six months5. This translates globally to approximately 1.7–1.8 billion people using AI, with around 500–600 million engaging daily. However, despite widespread usage, consumer spending on AI tools remains comparatively low at just $12 billion annually. This represents a significant monetization gap, indicating substantial potential for specialized tools that can better capture consumer willingness to pay by addressing specific, high-value needs.
Source Menlo, 2025.
The rapid expansion of consumer AI also highlights a significant market opportunity, particularly in AI infrastructure and specialized applications. Companies providing foundational infrastructure and tools that enable AI functionality, in our opinion, stand to potentially benefit greatly. By delivering accessible, powerful, and intuitive solutions, we believe these companies may capture substantial value from the ongoing consumer shift toward AI-enhanced productivity and creativity. Investments in such companies are highly speculative, illiquid, and subject to substantial risks, including the risk of complete loss of principal. Prospective investors should carefully evaluate these risks in light of their own financial circumstances and consult their legal, financial, and tax advisors before making any investment decision.
Closing Remarks
“Private markets are navigating a complex macro environment marked by persistent inflation, policy volatility, and shifting geopolitical alliances. While the IPO window remains selective, a handful of IPOs did perform exceptionally well in the after-market (Circle, Coreweave and eToro). Robust activity in secondaries also continues to provide liquidity. We’re seeing investors focus on high-quality assets in AI, robotics, and fintech, but remaining vigilant to valuation discipline and macro risks. We believe the coming quarter will reward those who can balance selectivity with adaptability to the evolving landscape and focus on companies that have been provided with clear roadmaps provided their now publicly traded comps.”
– Dan Sanders, Head of Private Markets, CEO InvestX Markets LLC.
- 1Stock Analysis ↩
- 2Preqin 2025 Private Markets Outlook, September 18, 2024, Page 3. ↩
- 3Source: Pitchbook and Coatue, as of June 2025. Note: 2025 YTD is $117B. ↩
- 4Source: Pitchbook data, Nasdaq information, and Coatue, as of June 13, 2025. Note: 2025 YTD is $112B. ↩
- 5Source Menlo, 2025 ↩
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