Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

Here is a fact that should change how you think about investing.

Databricks recently crossed $4 billion in annual recurring revenue and is still private. Revenue growing 50% year over year. Positive free cash flow. Over 650 customers paying more than $1 million annually.

For context, Facebook had $3.7 billion in annual revenue when it went public in 2012. That company is now worth just under $2 trillion.

Databricks has more revenue than Facebook did at IPO. And public market investors cannot touch it.

The Private Market Premium

This is not a one-off. Look at the payments sector.

Stripe, still private, carried a $106 billion valuation and processed $1.4 trillion in payments last year with 38% growth. PayPal, which is public, had a $70 billion market cap and processed $1.68 trillion with just 10% growth.

Stripe is growing nearly 6x faster than PayPal. But public market investors can only buy the slower-growing company.

This is what we call the Private Market Premium. The best companies are capturing their most significant growth phases while they are still private. And by the time they IPO? You are buying mature companies at mature valuations. The fireworks are already over.

What Changed

The median age of companies at IPO has increased from 7 years a decade ago to 11 years now. But this is not just about age. It is about scale. Companies used to go public at $100 to $200 million in annual revenue. Now they are staying private until they hit billions.

Three forces are driving this.

First, there is an ocean of private capital available. Global PE and VC funds were sitting on $2.6 trillion in uncommitted capital in 2024. Companies can raise hundreds of millions privately without the IPO hassle. Why go public when private investors will write the check with fewer strings attached?

Second, the IPO market has been volatile. Inflation uncertainty, trade policy shifts, market swings. Many companies have paused plans to enter public markets. Why subject yourself to quarterly earnings calls and analyst expectations when private investors offer more patience and flexibility?

Third, the regulatory burden of being public keeps growing. SOX compliance, SEC filings, earnings guidance, activist investors. Private companies can focus on long-term execution instead of managing Wall Street quarter to quarter. For founders who want to build for the long run, staying private is increasingly the rational move.

Why This Should Shift Your Investment Thinking

If the most valuable growth is happening in private markets, then investors who only buy public equities are systematically missing the biggest returns.

Consider the math. If you invested in Facebook at its 2012 IPO, you did well. But the people who invested in Facebook's seed round in 2004 did astronomically better. The gap between getting in during the private stage versus the public stage can be orders of magnitude.

That gap has only gotten wider. The growth that used to happen in public markets, where anyone with a Schwab account could participate, is now happening behind closed doors. Year after year, the most dramatic value creation is occurring before these companies ever ring a bell on the NYSE.

This creates a real problem for most individual investors. You need deal flow. You need to be accredited (in many cases). You need the knowledge to evaluate early-stage companies. The traditional entry points just do not work anymore.

But it also creates a massive opportunity for anyone willing to learn the game.

How Angel Investors Fit In

This is where angel investing becomes strategically important. Not as a side hobby, but as a core piece of a diversified portfolio.

When you invest at the pre-seed or seed stage, you are getting in at the earliest point of that private growth curve. A $5,000 check buying equity at a $5 million valuation. If that company grows to $500 million before ever going public, that is a 100x return that public market investors will never see.

Of course, early-stage investing carries real risk. Most startups fail. But the structural shift toward companies staying private longer means the upside for early investors has never been greater. The window of private growth keeps expanding, and the people who are in that window are the ones capturing the outsized returns.

The key is access to quality deal flow, education to evaluate opportunities, and a community to learn from. Angel Squad provides all three, with co-investment opportunities into Hustle Fund's portfolio starting at $1,000. If private market access matters to your strategy, explore it at Angel Squad.

The best companies are staying private. The question is whether you will be on the cap table when they finally do go public.