Skip to content

CONTRIBUTORS

Tony Davidow, CIMA®

Senior Alternatives Investment Strategist
Franklin Templeton Institute

Global Legal Information

In the latest episode of the Alternative Allocations podcast, I had the opportunity to sit down with Matt Hodan, Partner with Lexington Partners, to discuss the outlook for venture capital (VC) and growth equity.  After several challenging years, I wanted to explore the opportunities in VC and growth broadly, and where Matt is seeing opportunities to deploy capital today.

I began by asking Matt about the current market environment. Matt stated: “Today, we're seeing just an incredible opportunity driven by a number of forces that are shaping the venture and growth market. The market has changed a lot over the years. One of the principal forces has been companies are staying private longer.”

We have covered the implications of private companies staying private longer, and how this is reshaping the capital markets.1 We used SpaceX as an example of the changing journey that private companies take—SpaceX was a 24-year-old company when it went public earlier in the year. Due to the abundance of capital, founder Elon Musk was able to raise capital and execute a long-term strategy.

I asked Matt about two other high-profile initial public offerings (IPOs) on the horizon, OpenAI and Anthropic. Matt commented: “Those companies get most of the press. And I think there's broad awareness of the incredible journey that those companies have had and the value creation those companies have experienced. They're really the example of what's possible in the market, but they've already arrived.”

Matt noted that “We're really focused on building exposure into the tier one venture-backed assets of today but also building exposure into tier one venture-backed assets of tomorrow. We're spending most of our energy focused on identifying the next Anthropic, OpenAI, and SpaceX.”

To close out our discussion, I really wanted to understand the size and the scale of the opportunity set. “What we are seeing in venture and growth is an incredibly sizable asset class, with an incredibly fragmented universe of companies, at various stages of their development in various sectors or sub-sectors within venture growth. There are phenomenal companies being built in many different areas across the landscape.”  

Matt was optimistic about the opportunities across venture and growth. After a few sluggish years, the SpaceX IPO reminded us about the incredible innovations private companies are achieving.

To learn more about the opportunities discussed in the podcast, or read any of our research, please visit the Private Markets Knowledge Hub.

If you missed this episode, or any of the previous Alternative Allocation podcast episodes, don’t forget to subscribe wherever you get your podcasts. We encourage you to subscribe so you never miss an episode. 

Endnotes

  1. Tony Davidow. “Alternative Allocations: The convergence of public and private equity.” June 16, 2026.

​​​​​​​

WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested.  

Investment strategies involving Private Markets (such as Private Credit, Private Equity and Real Estate) are complex and speculative, entail significant risk and should not be considered a complete investment program. Such investments viewed as illiquid and may require a long-term commitment with no certainty of return. Depending on the product invested in, such investments and strategies may provide for only limited liquidity and are suitable only for persons who can afford to lose the entire amount of their investment. Private investments present certain challenges and involve incremental risks as opposed to investments in public companies, such as dealing with the lack of available information about these companies as well as their general lack of liquidity. There also can be no assurance that companies will list their securities on a securities exchange, as such, the lack of an established, liquid secondary market for some investments may have an adverse effect on the market value of those investments and on an investor's ability to dispose of them at a favorable time or price. 

“Secondaries” is the term related to private offerings (typically structured as partnerships, led by investment managers as the General Parter, or GP) where a new investor, or secondary buyer, purchases an existing investor’s commitment to a private equity fund and effectively becomes a replacement investor as a limited partner (LP). 

Venture Capital and Growth Equity portfolio companies may underperform, suffer business or financial deterioration, require additional capital, or be adversely affected by market, legal or regulatory changes. These risks may be greater in smaller funds or turnaround situations, particularly where the investor lacks control over management decisions. 

Any references to specific companies mentioned are only to illustrate well-known names in their respective sectors; such references should not be construed as an endorsement or recommendation of any company, product, or service. 

Diversification does not guarantee a profit or protect against a loss. Past performance does not guarantee future results.

​​​​​​​WF: 12808608

This document is intended to be of general interest only. This document should not be construed as individual investment advice or offer or solicitation to buy, sell or hold any shares of fund. The information provided for any individual security mentioned is not a sufficient basis upon which to make an investment decision. Investments involves risks. Value of investments may go up as well as down and past performance is not an indicator or a guarantee of future performance. The investment returns are calculated on NAV to NAV basis, taking into account of reinvestments and capital gain or loss. The investment returns are denominated in stated currency, which may be a foreign currency other than USD and HKD (“other foreign currency”). US/HK dollar-based investors are therefore exposed to fluctuations in the US/HK dollar / other foreign currency exchange rate. Please refer to the offering documents for further details, including the risk factors.

The data, comments, opinions, estimates and other information contained herein may be subject to change without notice. There is no guarantee that an investment product will meet its objective and any forecasts expressed will be realized. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where an investment product invests in emerging markets, the risks can be greater than in developed markets. Where an investment product invests in derivative instruments, this entails specific risks that may increase the risk profile of the investment product. Where an investment product invests in a specific sector or geographical area, the returns may be more volatile than a more diversified investment product. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from use of this document or any comment, opinion or estimate herein. This document may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

Any share class with “(Hedged)” in its name will attempt to hedge the currency risk between the base currency of the Fund and the currency of the share class, although there can be no guarantee that it will be successful in doing so. In some cases, investors may be subject to additional risks.

Please contact your financial advisor if you are in doubt of any information contained herein.

For UCITS funds only: In addition, a summary of investor rights is available from here. The fund(s)/ sub-fund(s) are notified for marketing in various regions under the UCITS Directive. The fund(s)/ sub-fund(s) can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 93a of the UCITS Directive.

For AIFMD funds only: In addition, a summary of investor rights is available from here. The fund(s)/ sub-fund(s) are notified for marketing in various regions under the AIFMD Directive. The fund(s)/ sub-fund(s) can terminate such notifications for any share class and/or sub-fund at any time by using the process contained in Article 32a of the AIFMD Directive.

For the avoidance of doubt, if you make a decision to invest, you will be buying units/shares in the fund(s)/ sub-fund(s) and will not be investing directly in the underlying assets of the fund(s)/ sub-fund(s).

This document is issued by Franklin Templeton Investments (Asia) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong.

Unless stated otherwise, all information is as of the date stated above. Source: Franklin Templeton.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.