Host: Today's capital markets segment is brought to you by Alpaca as Wall Street kicks off third quarter earnings season. All eyes are on how public tech giants as well as private venture-backed unicorns are justifying trillions in capital spending. But while public markets hover near record highs, private venture valuations face a critical tipping point as late-stage tech startups prepare for a potential IPO stampede. Well, with investors demanding real profitability over accounting noise, how are late-stage private portfolios repricing ahead of next year? Well, joining us live on set here at the New York Stock Exchange is Willie Lee, principal at Neostellar Advisors. Willie Lee, great to have you back. Thank you so much for joining us.
Willie Lee: Of course, it's great to be here.
Host: Well, it's hard to believe, but here we are in the final quarter of 2026. There's a lot of anticipation when it comes to the public versus private markets. So when it comes to privates, what's actually happening right now?
Willie Lee: I think what you're seeing in the private sector or the private markets is this huge investment that's going on on the back of LLMs, especially on decreasing pricing for API costs and efficiency that you're seeing there. So in 2025, you saw about $260 billion be deployed in North America. That's outside of OpenAI. This year, you're seeing about $200 billion in just the first half, so it's 74% of the full year of 2025 in just the first half is what you're seeing and how much opportunity venture capitalists are seeing in this space.
Host: And speaking of which, you mentioned two key names which we were talking about before we even went on air, and that is Anthropic and OpenAI. So given the anticipation as well as reality, give us your perspective on both timeline as well as valuations.
Willie Lee: So on the timeline, I think Anthropic has already indicated the timeline that they're anticipating, and you'll probably see OpenAI in 2027. So I think the timeline is pretty set in terms of when they're anticipating going. In terms of valuation, I think what you're going to see is exactly what everybody's talking about, which is testing the water of this $2 trillion valuation. But I think what people are having a, I think, attaching to is like putting those in real numbers, or like because there's such large valuations and such large numbers on ARR growth that putting it in perspective is really helpful. So just think about Google's growth in June 2025 to June 2026 on a revenue basis, $75 billion between that timeline, and in that timeline their market cap grew over $2 trillion. And so if you think about the growth that OpenAI and Anthropic have put on just year to year, it's over $100 billion of ARR. So that's, I think, a good way to look at it.
Host: And of course, as earnings season kicks off, we're paying attention to guidance coming out from some of the big banks. But of course, when we're talking about the IPO market, there's been a lot of volatility in 2026, and even after SpaceX went public, we've been seeing plenty of volatility for that name. So when we're talking about opportunity, especially when we're talking Anthropic as well as OpenAI, and of course we're talking LLMs, what do you think investors need to keep in mind?
Willie Lee: I think what investors are missing, because the Anthropic IPO has just taken all the oxygen out of the room for anything else, is just how much we're seeing on the private market side. I talked about how much investment is going on there, but just how much activity is going on in the private markets that the public markets are starting to take notice of and they're releasing products against that. I think what investors need to understand is how much opportunity is in this private market that they're not getting access to, which is why I think Neostellar's positioning and investing in private companies is so important, because getting that exposure is becoming more and more valuable as this investment stays in the private side.
Host: And when we're talking about some of these unicorns out there that we're anticipating to go public, they are staying private for longer. So tell us about the pros and cons, and at Neostellar, what else are you looking at?
Willie Lee: Yes, so the pros and cons, I mean, you see many, many companies, whether that's Databricks or Stripe or, call it like, Bass Data or some of these other companies who have stayed in the private markets for a very long time and accrued value. They're just waiting for the right time to go public. There's not an urgency because I think the markets and the capital within the private markets have been so robust that I think they see a lot of value staying private for longer. So that's a lot of our thesis, is that some of these companies are just going to continue to accrue value because there's not just this urgency to go public.
Host: Yes, and when we're talking about investing, of course we're talking about the democratization of access to pre-IPO companies, and we all know that we have devices that allow us to get into the markets, especially when we're anticipating some large names coming down the pike. So what are you seeing when it comes to retail investors and pre-IPOs?
Willie Lee: I think there's this increased interest. I think Anthropic and OpenAI are great examples, and SpaceX, I think, was the biggest example, where there's all this retail interest in trying to get access to SpaceX and all this latent demand that you saw interest in Neostellar or some of our peers in the space. Robinhood obviously getting involved in this space, I think, adds a lot of legitimacy to what they're seeing from their retail investors saying, hey, we want access to some of these names that are household names. What Neostellar does is we try to go a little earlier, before you hear it as a household name, and I think that's been something that resonates with some of our investors.
Host: And finally, as we head into the final months of this year, there's a lot that we're paying attention to, whether we're talking about macro or even geopolitics. But when we're looking at the laggards versus leaders for the S&P 500, energy, IT do come to mind. But when we were talking about private markets, where's the concentration right now?
Willie Lee: The concentration is happening from infrastructure, which has become obviously a very key topic in all of this, but also moving up the stack to new tools that are helping enterprises adopt AI. What you're seeing with Spotify getting involved in this space and Meta getting involved with enterprise, these companies are not intrinsically enterprise SaaS companies, but they're seeing such a separation between the haves and have-nots of who knows how to use AI and who doesn't know how to use AI that they feel compelled to release products. So we're seeing it on the private side too, where companies are building tools to help these companies adopt AI, whether it's Cognition and these other folks, because the gap is just so broad, which means there's so much juice to squeeze left for Anthropic, Anthropic and OpenAI.
Host: And finally, before I let you go, you brought up Spotify as well as Meta, and when it comes to Meta, we're watching what they're doing when it comes to artificial intelligence. So what do you make of the future for that name?
Willie Lee: I think Meta's future has been very bright. I think you saw at the beginning of this year there's a lot of speculation on whether or not they could be real competitors in this space, but I think less of them becoming really big competitors. But I think what they've introduced, and it started with Instinct, is sort of this next wave of this 2022 ChatGPT boom that we saw, this AI assistant boom. Seeing from the private side is almost as big, if not bigger, which is this rapid adoption of AI technology that we have not seen the likes of since 2022 that I think will introduce a lot of consumers who have been waiting for, how do I make this useful, right? And I think people are starting to see how that can be very useful.
Host: Willie, we will have to leave it there for today, but I appreciate your time. Thank you so much for joining us, and thank you for all of your insight.
Willie Lee: Thank you.
