By the time you see the prospectus, the deal is already half done.
That is not a conspiracy.
It is the structure of the modern IPO — and it is worth understanding before OpenAI, SpaceX, or the next generation of trillion-dollar private companies arrive at the public market asking for your money.
The ceremony still looks familiar.
A company files, bankers road-show the story, and the market is invited to set a price.
But the number of retail investors asked to ratify on listing day was rarely disclosed in public.
It was built quietly, over years, through late-stage funding rounds, company-run tender offers, insider share sales, and private secondary deals negotiated among a small circle of institutions that were already deep inside the cap table.
By the time an S-1 lands in front of ordinary investors, the company has often already been priced, partially liquidated, and circulated among sophisticated buyers — sometimes at valuations an order of magnitude higher than where it started. What looks like price discovery is frequently price confirmation.
This matters now because the pipeline is filling up. OpenAI has signalled it wants to reserve IPO shares for retail investors. A SpaceX listing could reshape the 2026 market if it moves forward.
Both companies carry years of private pricing history — tender offers, mega-rounds, fund marks — that will arrive with them at the public gate.
But OpenAI and SpaceX are illustrations, not exceptions. The mechanism runs across late-stage private capital. The question is not whether the system is rigged.
It is more uncomfortable than that: if valuation is increasingly built in private, what is the public market actually left to discover?
Price may be public, but the valuation journey often is not
The basic contradiction is easy to state. IPOs are supposed to be moments of price discovery. Yet the most influential pricing signals often appear before public investors can participate.
A late-stage funding round may set a headline valuation. A company-run tender offer may let employees or early investors sell a slice of stock to approved buyers, creating another price signal.
Large funds that hold the company may then update the value of their stake on paper using those transactions and their own models.
Banks and institutions absorb those signals before formal IPO marketing begins.
By the time the listing arrives, the offer range is often built around a number that private markets have already normalised.
None of that necessarily implies manipulation. It does reflect a major change in scale, duration and access.
Companies are staying private longer. They are raising far more money before listing.
And the earliest, richest pricing opportunities are increasingly available first to founders, employees, venture firms, crossover funds and wealthy buyers in private transactions.
The IPO, in other words, is increasingly not where valuation starts. It is where private valuation meets public scrutiny.
The growth is happening before the IPO
Invezz reached out to Harvard Business School professor Josh Lerner, who captured the shift in plain English:
The #1 change is that companies are staying private much longer, raising much more money as private firms, and then going public with huge valuations… retail investors miss out on much of the price appreciation.
That line lands because it is not just about delayed listings.
It is about where the growth happens. If a company raises multiple large private rounds over a decade, much more of its expansion is financed and valued before public investors are allowed in.
By the time it lists, the business is often larger, more familiar to institutions and already carrying a thick history of private pricing signals.
Jay Ritter’s updated IPO data gives the point a hard statistical backbone.
Tech companies going public in 2025 had a median age of 12 years, compared with roughly 4 to 5 years around the dot-com peak.
That is not a small drift. It is a structural change in the life cycle of public offerings.
The practical consequence is simple. Public investors are often no longer buying into the steepest part of the growth curve.
They are buying after much of the narrative, and much of the valuation has already hardened.
Watch the chain in one company
OpenAI offers a useful illustration, not because the company is typical, but because it shows the mechanism in unusually clear stages.
In early 2024, OpenAI completed a deal valuing the company at [MONEY value=”80000000000″ currency=”usd” notation=”long” replace=”false”] more through a tender offer led by Thrive Capital.
That was not a public listing. It was a private transaction that allowed existing shareholders, including employees, to sell stock.
Even so, it created a visible valuation marker. A limited private sale had produced a number that the market could repeat.
Months later, that marker moved sharply higher.
In October 2024, OpenAI raised [MONEY value=”6600000000″ currency=”usd” notation=”long” replace=”false”] in a funding round valuing the company at [MONEY value=”157000000000″ currency=”usd” notation=”long” replace=”false”].
Thrive again played a central role, with participation from major investors including Microsoft and Nvidia.
That round did more than bring in fresh capital. It established a new reference valuation, one large enough, and credible enough, to travel well beyond the cap table.
That is how the chain works.
A tender offer gives insiders liquidity and creates a price signal. A later fundraising round, backed by brand-name investors, resets the signal at a much higher level.
That headline valuation is then repeated across financial media, internal fund marks, pitch materials and institutional discussions.
It becomes the number against which future expectations are calibrated.
If OpenAI eventually files to go public, public investors will not be meeting a blank slate.
They will be encountering a company whose value has already been debated at [MONEY value=”80000000000″ currency=”usd” notation=”long” replace=”false”] then [MONEY value=”157000000000″ currency=”usd” notation=”long” replace=”false”] in transactions that were negotiated privately and accessible only to a narrow group of participants.
Any future IPO price range would not emerge in isolation from that history. It would have to contend with it.
Damodaran’s reality check
Aswath Damodaran of New York University offers the necessary counterweight while speaking with Invezz.
“The pricing is guided by what the most recent pricing on the company was prior to the IPO. In the last few decades, where VC rounds have multiplied, that pricing may have come from the most recent pricing round.”
But more importantly, who cares? Ultimately, this is about getting the company priced, and I am not sure that having a more active private market has helped or hurt much on that process. It has just made banks less necessary.
His point, in essence, is that this may be less a scandal than an evolution.
However one defines price discovery, the offer price set before trading begins or the market price once trading opens, both are naturally influenced by the company’s latest serious transaction.
In that sense, more active private markets may simply have moved the first meaningful pricing signal upstream.
The bigger change may not be that IPOs are being distorted, but that banks no longer dominate the early valuation process the way they once did.
Wall Street still gets paid at several gates
Even if banks are no longer the sole authors of valuation, they still earn substantial money around the system that produces it.
Goldman Sachs reported [MONEY value=”9340000000″ currency=”usd” notation=”long” replace=”false”] 2025 investment-banking fees, up 21% from a year earlier.
Morgan Stanley reported [MONEY value=”7619000000″ currency=”usd” notation=”long” replace=”false”] in 2025 investment-banking revenue for 2025, after a 47% jump in the fourth quarter.
Those numbers do not prove wrongdoing. They do show that the private-to-public pipeline remains a lucrative business.
The fee streams are more concrete than the usual talk about “advice” suggests.
Banks can earn fees arranging late-stage private placements, where a small group of investors buys into a company before it files publicly.
They can earn advisory or placement fees on company-run tender offers that give employees and early shareholders liquidity without an IPO.
They can help place stock with crossover investors, funds that buy late in private markets and then often show up again in the IPO book.
And if the company does list, the same banks may later collect underwriting fees on the public deal itself.
That is why the pre-IPO market matters commercially. A tender offer is not just an internal housekeeping event.
A late-stage round is not just a financing.
Each one can be a revenue opportunity, a relationship-building opportunity, and a way to help shape the investor base that eventually arrives at the IPO.
In plain language, banks may have lost some monopoly power over the pricing narrative. They have not lost their ability to charge at several gates along the route.
Why the SEC is focusing on the quality of the signal
This is where the regulatory story becomes sharper.
The SEC’s March 4, 2026 Private Markets Roundtable did not simply ask whether ordinary investors should get more access to private assets.
It put a more fundamental question on the table: how reliable are the valuation signals feeding that access?
That is a more consequential issue than it first appears.
As private assets move closer to mainstream portfolios — whether through funds, secondary platforms or eventual public listings — thin private trades and negotiated round prices can start influencing a much broader population of investors.
SEC Chairman Paul Atkins framed the discussion around access, fairness and the need for “consistent, reliable valuation.”
The key phrase is valuation.
The concern is not that every private mark is suspect.
It is that private prices are often formed under conditions very different from public ones: selective participation, limited disclosure, negotiated terms and uneven information.
If those prices increasingly shape how companies are discussed, marketed and eventually sold to a wider audience, then the quality of the signal becomes a market-integrity issue, not just an insider one.
That is the real regulatory turning point.
The SEC is no longer looking only at who gets in. It is looking at the price history they are being asked to trust.
Is the public market still discovering the price or confirming it?
Put Lerner and Damodaran together, and the story comes into focus.
Lerner’s argument is that companies now arrive at IPO older, larger and more expensively pre-priced, leaving retail investors to miss much of the rise.
Damodaran’s argument is that this may be what a more developed capital market looks like: private transactions generate the first serious valuation, and public markets then test it.
Both views contain truth. Public markets still matter because they remain deeper, more liquid and more unforgiving than private ones.
They can reject a private-market story fast. A hot IPO can falter. A richly marked company can trade down hard once public investors begin testing the assumptions in real time.
But the public market is increasingly doing that work against an inherited reference point. It is not always writing the opening valuation from scratch.
More often, it is deciding whether to ratify, refine or reject a number that private markets have already spent months constructing.
The post OpenAI, SpaceX IPOs: what investors need to know about private pricing appeared first on Invezz
