Tony Frascotti, William Blair's Head of Private Shares Trading, discusses the evolving landscape of private shares trading, highlighting market shifts, the expanding influence of AI and crypto sectors, and the changing dynamics of IPOs and liquidity for late-stage private companies.
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Podcast Transcript
00:20 Chris T
Hi everybody. Today is December 8th, 2025. Welcome back to William Blair Thinking Presents. Joining me today is Tony Frascotti, he's William Blair’s head of private shares trading, who remains at the center of a rapidly evolving market, I guess you could say. The last time I spoke with Tony was back in March, and, since then, the private shares market has shifted in some important ways. So, I thought, why not get back in touch and catch up with him?
So, Tony, welcome back.
00:46 Tony F
Yeah, thanks for having me, Chris.
00:47 Chris T
Let's dive right in. Tony, what would you say has been the biggest shift in the private trading market since we last chatted in March?
00:55 Tony F
Yeah, I mean, things have changed quite a bit. I would say the biggest change has been just an increase in notional valuation in a lot of the, sort of, top 15 companies. You know, some of these companies have increased in terms of hundreds of billions of dollars of market cap. And with that, you have new stakeholders, sort of, leaving before realizing their gains and people putting on new positions.
And you also have, sort of, the profile of different buyers changing as things, you know, grow in terms of their valuations. It gets on the radar screens of more varied types of buyers. So, I think we've seen the ecosystem develop in the sense that there's a lot more mindshare and more diversified buyer types versus, you know, where it was a little bit more focused when we last spoke.
There's also been some pretty notable acquisitions in our space in the last couple of months, and that has turned some heads. So, I think that we've seen a greater focus on, sort of, the retail availability of private shares trading, and there's a number of people that have made different acquisitions to try to address that.
But, just in general, I think that there's been greater focus by more market players on democratizing these assets. While, you know, some of the top, top 10 or 15 names have continued to really grow quite quickly.
02:14 Chris T
All right. Well, the first half of 2025 featured somewhat of a rebound in IPO activity, in the U.S. especially, with 174 companies raising $31 billion. Has this momentum translated into greater confidence or liquidity for late-stage private investors? And then I guess the second question I have is, are you seeing more companies preparing for IPO or are they still favoring extended private rounds?
02:36 Tony F
I would say that on balance, we're seeing more companies extend their private life cycle. There have been some pretty notable companies that have mentioned that they will be seeking IPOs in 2026. And, it could be that ‘26 is a pretty active year for capital markets, for some of these really large ones. But ‘25, we didn't see sort of that big clearinghouse, $100 billion type IPO that we would have expected.
We saw a couple of companies go, that were high quality companies. But in general, with the exception of maybe two or three, the pricing has hasn't really held up in the public market. So, I think that that has sort of scared some of the smaller companies. And, it's given the larger companies that, you know, have a lot of access to capital in the private markets less of a thought that they need to go public in the short term. They just have really long runway, private capital availability is, as high as it's ever been for these companies. So, there's not really the same pressure to go public that we've seen in the past. So, I think that while we have a lot of these really large companies that have an IPO on their timeline on the horizon, we don't have anything that, sort of, immediate term, and they don't have the traditional pressures that venture-backed company would have because of just the availability of private capital.
So, I think that we will see some IPOs in 2026, and probably some in 2027, but the market dynamics will have to be really favorable to get some of these folks out the door because the leverage is just not tilted against them. There's a lot of availability for private capital. They have long runways for growth. Many of these private companies have shown that they can be $100 billion type companies in the private markets and still provide liquidity for their shareholders because the private markets have developed, from a liquidity perspective, that while you're not going to get that one big fell swoop of liquidity that you get in an IPO, there's still really interesting pockets of liquidity for shareholders that, sort of, decreases the pressure on the issuing company from getting out the door.
04:30 Chris T
Your team continues to work with a diverse set of market participants—family offices, VC funds, secondary funds, crossover funds on the buy side, founders, employees, and early investors on the sell side. Are you seeing any changes in who’s most active, or in the motivations for seeking liquidity?
04:46 Tony F
Yeah, I think that, it's December now. So, we have a lot of folks that are looking for liquidity to try and, sort of, true up their year-end performance. I think that the same dynamic that we talked about last time where there's 2021 vintage funds that might have some assets that have been heavily drawn down in one or two of these high-flying names that are up significantly, is very much in the forefront of, sort of, our sell side profile. People that have large gains that they can lock in to try and, sort of, prevent big LP redemptions.
And so, we're seeing, you know, pretty chunky sales on the backs of some of these new funding rounds that have brought companies up to a new price level and are allowing people to, sort of, harvest gains at a really opportunistic time in the year. On the buy side, I think that there's been a lot of press out about private markets in the last three to six months, and that has converted some new participants, as well as just put it on the roadmap for a lot of new people.
So, I think the general understanding is that if you're not participating in the private markets, you at least have to be paying attention to it. And given that, you know, there haven't been quite as many IPOs as we probably would have thought. I think that we're seeing some more of the equity capital markets traditional players start to crossover more and participate in these private fundraising rounds, and also in the secondary markets, because we still have a very well-capitalized venture capital community. And, there have not been that many funding rounds on a company-by-company basis.
The ones that have come out have been huge, on balance, but they're still mainly getting gatekept by a lot of these traditional VCs. So, you start to see some of the other market participants who might view private markets as a more recent capability, lean on secondaries to try to get exposure to some of these names that might be more difficult for them to access in the primary markets.
06:37 Chris T
Let's talk sectors. You know, last time we spoke, we did touch on AI a bit, it was dominating. Is it still the case that AI is the dominant, you know, sector right now?
06:47 Tony F
Yeah, I think that AI is still on top of everybody's minds and definitely the most active one for us. And we, you know, the AI companies that have raised large funding rounds recently, which have been pretty public, are obviously top of mind for us, but we're seeing, sort of, expansion of that category into more of the downstream players and the tangential players.
And, there are a couple of companies that have managed to sort of rebrand their entire mission statement to be more aligned with the growth of the AI infrastructure, especially from, you know, an energy perspective and from a chipmaking perspective. We've seen some really interesting shifts. And, most of those companies that have been able to successfully pull off the shift have raised pretty large funding rounds in lockstep with that.
So, I think that that's been a big change. You know, it hasn't been quite so much, people crowding a lot of the top three to five AI names. But, there's been more tangential ways to play it. And, obviously, every company is trying to add AI into their mission statement in some way or fashion, because it does feel like, you know, category breaking technology.
So, I think it's still within that sector, but the sector is broadening itself to encapsulate a lot more companies as companies try to become nimble and adapt with the times.
08:08 Chris T
So, with public options for AI exposure still limited, how are investors approaching private AI deals? Are there any notable trends in how these transactions are structured or in the types of companies attracting the most interest?
08:21 Tony F
Yeah, I think that, you know, some of the largest companies have had, as I said before, really big funding rounds to the tune of billions of dollars. And, in any of those funding rounds, you know, access becomes more disseminated around those rounds because there's a new mark, there's a lot more stock that comes out on to, into the major investors.
And, we'll start to see that flow in one way or another, whether it's somebody subscribing out access to a co-investment vehicle and a funding round, whether it's an LP stake that might have previously been stuck at a certain price level, but that funding round rerated that price level, or whether it's, you know, an early stage investor that has an opportunity to lock in a really nice gain early in the year.
I think that in general, these big clearinghouse funding rounds have just opened up availability a lot more and made it more accessible for a broader variety of investors. Now, anybody that's tried to participate in these primaries knows that it's not necessarily the easiest thing to get direct primary stock on the cap table of all these companies. So, we've seen, you know, an increased cohort of people sort of lean on the secondary markets for those access points because there's just so much more of it that becomes available.
It tends to be quite chunky around these funding rounds. But, you know, there's definitely been more moments in time this year where you've had the ability to utilize secondary markets to either start a net new position, grow your position, or frankly, divest, in a more meaningful way, that might be more than the company sponsored liquidity programs allow.
09:53 Chris T
Interesting. So, what about crypto? You know, it was quiet for a while. Has that changed?
09:58 Tony F
Yeah, it's definitely changed. It's been a wild ride, as crypto always seems to be in the sense that, you know, we were a lot higher a month ago than we are today. But, I think that it definitely has garnered a lot more investor mindshare. There's been some big shifts in terms of, you know, availability of some of these products that has lent itself to more interest in some of the infrastructure plays.
And, I think that we've seen some of these names really come, come back into the fray that might have been shut for trading for two or three years. And even though, you know, we're not at all-time highs right now, I think that the general momentum in the year has brought a lot more investor mindshare to that vertical. And, we've seen much more transactional volume in that vertical than we have in years past.
10:46 Chris T
All right. So, as we look to 2026, what are the biggest opportunities and challenges you see for profit shares trading. And then, I guess, the second follow up to that would be there any emerging sectors or even deal structures you are watching closely?
11:00 Tony F
Yeah, I mean, it will be really interesting to see how some of these big acquisitions play out because, you know, most of them have been geared at sort of democratizing the asset class. And, I think if there's a couple of big players that are that are trying to find out the best way to do that, so that'll be something to watch to see what the availability looks like.
I think that we will probably see less of these 2021 vintage funds that are trying to redeem their high-flying assets because they've gotten so many opportunities to do so this year. And, that's part of the traction that we're seeing in December, as we really get close to the end of the year.
I do think that the market still has a lot of room to expand. Two things to watch, I would say, is that, you know, when you think about, sort of, the trajectory of private shares trading in the last five years, we had this big run up in valuations in 2021, and then we had basically a winter in 2022.
And, now that we're in 2025, you have a couple of different cohorts of companies that are worth looking out for. So, the first is, you know, in 2022 when things really sold off and growth, we saw a heavy pivot in venture to funding some of these early-stage companies. And now that we're three years off from that, those early-stage companies are now growth companies.
So, there's this new cohort of companies that are, sort of, probably 24 to 36 months away from IPO series D type companies that are, you know, growing revenue at 60% to 100% with focus on cash flow and profitability. And, that cohort of companies is really interesting. You also have the cohort of companies that raised in 2021, took a really bad valuation and had a remaking period during ‘22 and ‘23, where they had to focus more on profitability, get their brand under control and grow at real rates.
And the ones that have been able to do that have, sort of, exited the winter, at what is probably their most healthy point in the life cycle. And, while they're not growing, you know, 50% to 70%, they're growing solidly at 30% to 40% with really good margins, are approaching cash flow breakeven. So, I think that those companies will definitely be ones to watch, that those will probably be the ones that look towards IPO in 2026 and 2027.
But, it's really quite impressive to see how some of them have been able to, you know, really remake their company to start to grow at real rates and, you know, have a much, much heavier focus on sort of cash flow. Last one that I would point to is just these AI adjacent companies that are focused on the energy infrastructure in the chip infrastructure.
You know, there's been a huge focus shift towards those as we start to realize that the grid is going to have to evolve if we're going to take up all this compute capability. And the companies that are addressing that and coming out with new and innovative strategies to do so are gaining a lot of investor mindshare, and we're seeing them raise subsequent primary rounds.
And with big primary rounds will come secondary opportunities. So, I think, you know, those are ones to watch out for, as well.
14:00 Chris T
All right. Well, Tony that's all the time we have, but always great catching up, really enjoy this. For those interested in connecting with Tony and the private shares trading team just visit WilliamBlair.com/contact-us. Otherwise, thanks for tuning in.