Before the Next Market Giants Go Public: Why Earlier Access Matters for Long-Term Investors

By Joel Shulman Direct answer: Many innovation leaders are staying private longer, which means public-market investors may miss a meaningful part of the value-creation cycle. XOVR was designed to address this shift by combining public equities with select private-company exposure inside an ETF structure. The Magnificent 7 changed the way investors think about market leadership. Companies such as Nvidia, Microsoft, Apple, Amazon, Meta, Alphabet, and Tesla became dominant forces across artificial intelligence, cloud computing, e-commerce, semiconductors, software, digital advertising, and electric vehicles. But the next generation of market leaders may not follow the same public-market path. Some of the most important companies in artificial intelligence, space infrastructure, defense technology, robotics, fintech, and next-generation communications may remain private for longer periods of time. That creates a new challenge for investors: what if the next market giants are being built before they are publicly traded?

Why companies are staying private longer

Private companies today often have more access to capital than they did in previous market cycles. Late-stage private financing allows many businesses to scale, expand internationally, and build infrastructure before considering a public listing. As a result, a company may create significant value while it is still private. For investors who can only access companies after an IPO, this shift may reduce the opportunity to participate in earlier phases of growth. The question is no longer only which public companies are leading today. The question is how investors can gain exposure to category-defining companies before they become broadly available in public markets.

What is crossover investing?

Crossover investing combines public-market exposure with select private-company exposure. XOVR was designed as the first ETF* to provide exposure to select private companies alongside public equities in one ETF structure. The strategy reflects the belief that investors may need both public and private exposure to participate in the full innovation cycle. This does not mean XOVR is a single-company bet. It also does not mean XOVR is designed for a one-time IPO pop. The fund is built around a long-term process that seeks to identify category-defining companies early.

Why a VC-style framework matters

ERShares developed its Entrepreneur Factor methodology after years of research into how venture capital investors evaluate exceptional companies. The methodology includes 18 attributes that seek to identify businesses with long-term leadership potential. This framework has historically helped ERShares identify major long-term winners early, including several companies that later became known as part of the Magnificent 7. The same VC lens now informs the way ERShares evaluates select private-market opportunities within XOVR.

SpaceX as a private-market example

SpaceX has become one of the most searched private-company investment topics because many investors want access before a potential IPO. But for ERShares, the SpaceX story is about more than one company. SpaceX is an example of why earlier access may matter in a market where category-defining companies can stay private for a long time. XOVR’s SpaceX exposure is obtained indirectly through a special purpose vehicle. SpaceX is an important holding, but XOVR is not a space ETF and not a pure SpaceX fund. It is a broader crossover strategy designed for investors who want exposure to select private companies alongside public equities.

What long-term investors should understand

The best venture investors often seek to identify companies before they are fully understood by the market. They do not invest with a one-day horizon. They invest with the expectation that exceptional companies may take years to build, scale, and compound value. XOVR was built for investors who think in a similar way: investors who want access to category-defining companies as early as possible, while understanding that real value creation often requires patience.

The takeaway

The next market giants may not all be public yet. XOVR was designed for this new reality: a market where innovation can happen in both public and private companies, and where earlier access may become increasingly important for long-term investors.

FAQ

Why does earlier access matter?

Earlier access represents a different point of entry in a company’s lifecycle, which may involve different risks and return characteristics.

Is XOVR only focused on private companies?

No. XOVR combines public equities with select private-company exposure in one ETF structure.

Is XOVR a SpaceX-only fund?

No. SpaceX is an important holding, but XOVR is a broader crossover ETF strategy focused on public and private category-defining companies.

Disclosures: Important information: Investing involves risk, including possible loss of principal. Private-company exposure involves additional risks. Past performance does not guarantee future results. Holdings are subject to change. * Basis of “first” claim: ERShares review of U.S.-listed open-end 1940 Act ETFs and public filings as of Aug 29, 2024; requires daily creations/redemptions and a single ETF portfolio with private-company exposure reflected in daily NAV alongside public equities. Excludes interval funds, closed-end funds, BDC/PE-manager ETFs, SPACs, and products without private-company exposure in NAV. Joel M. Shulman, PhD, CFA, is CEO and CIO of ERShares and the architect of the Entrepreneur Factor® and ERShares’ VC lens investment framework, which applies venture-style research principles to public-market investing.