SpaceX is about to make history—and 80% of VCs won’t see a dime of it

A live Term Sheet meetup of investors agreed SpaceX, OpenAI, and Anthropic will reward a sliver of venture. But most of the industry will be watching from the sidelines.

Hi, this is Amanda Gerut pinch writing for Allie Garfinkle from Aspen where we just wrapped the 25th annual Fortune Brainstorm Tech conference. 

Lots of buzz about SpaceX’s IPO slated for Friday. Given the $1.5 trillion to $2 trillion valuation range that has been thrown around—and the prospect of a total $5 trillion in value coming online after adding in Anthropic and OpenAI—you would be forgiven for thinking this summer means salvation for venture capital. 

That’s the idea floating around out there, said Nizar Tarhuni, executive VP of research and market intelligence at PitchBook.   

“There’s a narrative that this is the unleash,” said Tarhuni, who spoke during our live Term Sheet breakfast this week. That this is the savior of the venture market and locked-up liquidity, and I think it’s an important milestone, but it’s not necessarily a watershed moment.”

It all sounds tempting for a venture industry starved for exits, to be suddenly confronted with the onslaught of SpaceX, and then the confidential-but-nowhere-near-final IPO filings from OpenAI and Anthropic. It sure reads like everyone is about to eat.

That’s just not the case, said Tarhuni. 

He estimated there are about 11,000 venture investors out there in the market, and maybe 3,500 to 4,000 who are doing at least two deals a year. Among those, about 700 are invested in one of these three companies. That’s about 20% of the book, which means 80% of active VC are outside what looks to be one of the most significant liquidity events in history. 

When Tarhuni, and his co-panelists CapitalG’s Mo Jomaa and Notable Capital’s Hans Tung, broke it down, the conclusion was that these companies are anomalies. Since 2015, about $1.5 trillion in venture value has come to the capital markets. SpaceX is about to do that on its own. OpenAI and Anthropic will easily overshadow the size of other public listings in the past two decades, or ever. 

They’re going public because their appetite for capital, more specifically their need for compute power, is larger than what the private markets can properly nourish and feed. Even among the limited partners that fund all of this, there’s a concentrated hierarchy. 

The top tier of LPs got into SpaceX, OpenAI, and Anthropic, said Tung, either directly or through funds. Their numbers are about to look dramatically better than those of their peers. They’ll want more direct access to the next three dozen AI names that matter, he added, and that will inevitably push capital toward a shrinking set of winners. Tung predicts a multi-year shakeout that will ripple through the LP base, the venture market and even the buyout market, and all at once. Buyouts haven’t been adjusted for the AI impact, and the next decade will see plenty go through, said Tung. 

“The ripple effect, I think, is going to be dramatic over the next five years,” he said.

So, no this is not an open IPO window, said Jomaa, a partner at Alphabet’s independent growth fund. But that doesn’t mean there’s nothing to take away from this moment. 

“IPO windows come and go, and they open and close, and it’s like [riding] a very cyclical roller coaster, but the lessons and the investments you make to become IPO-ready are very timeless,” said Jomaa. SpaceX is investing heavily in its growth story, said Jomaa, because at the end of the day, “growth compounds, margins do not.”

“At the end of the day, investors buy stories, they don’t just buy stocks,” he said. “If you don’t have a really compelling narrative, investors are skeptical creatures and they will create a defensive one for you.”

See you tomorrow,

Amanda Gerut
Email: amanda.gerut@fortune.com
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This story was originally featured on Fortune.com