From Growth to Gains: Navigating Liquidity and AI's Pragmatic Pivot in Private Markets

Key Takeaways:

• There's a notable shift in focus from high-growth metrics to liquidity and profitability in private markets, highlighting the emphasis on sound business fundamentals and clear exit strategies.
• Global perspectives reveal a disparity between North America and APAC in terms of startup commercialisation and later-stage funding, with Australia positioned uniquely in this landscape.
• AI's burgeoning role, particularly in the healthcare and technology sectors, is met with both enthusiasm and skepticism, focusing largely on cost efficiency over revenue generation presently.

Rethinking Investment Strategies: From TAM to Liquidity

The investment landscape is experiencing a significant evolution. No longer are the benchmarks of success solely based on astronomical growth figures, but rather on a company's path to liquidity and the soundness of their business fundamentals. At a panel session in Emergence 2025, Rajeev Gupta , Managing Partner at ALIUM Capital , vividly captures this shift, noting, "In calendar 2021, a company would come to you, you'd open the first page and it would talk about total addressable market...now, it's generally about their pathway to liquidity and exit."

This change is not just about semantics; it signifies a deeper market sentiment where investors are increasingly aware of the need for exits that provide tangible returns. Steven Xu , Co-Founder & CEO at INP Capital , echoes this sentiment, emphasising that founders now need to demonstrate "capital efficiency, strong fundamentals, and path to profitability" to secure investment. This CAGR-to-EBITDA conversion trend reflects a matured market where survival is linked to adaptability and strategic financial planning over mere sprawl growth.

This new focus indicates broader implications for startups needing to pivot or recalibrate strategies to satisfy investor demands for clear paths to profitability and liquidity. As Gupta aptly points out, "Liquidity is the biggest change that we're noticing, not only in what we do, but also the companies themselves."

Global Investment Dynamics: Australia's Unique Position

Across the globe, investment strategies vary distinctly from one region to another. Steven Xu provides an insightful comparison, noting that "North America is still dominating the venture capital especially in AI and deep tech," while Asia Pacific is observed as being more "commercialisation driven." This stark dichotomy represents a fundamental difference in how regions approach innovation and commercialisation.

Australia, as described by Xu, "sits in the middle," offering robust innovation particularly in sectors like biotech and renewable energy but faced with constraints in later-stage funding. Karen Chan , Portfolio Manager at Perennial Partners , introduced another nuance, suggesting that Australian companies are increasingly being targeted for acquisition by offshore buyers who are eager to capitalise on valuation discrepancies, thus opening pathways for exits via M&A.

For startups and growth companies in Australia, these global dynamics suggest an urgent need to innovate with a global expansion mindset while being agile enough to navigate the funding challenges at home. This positioning also has ramifications for the strategic cultivation of investor relationships that span across borders, leveraging the best of both worlds for capitalisation and growth.

The Role of AI in Investment and Industry

Artificial Intelligence, the much-lauded disruptor, is a recurring theme across various sectors discussed in the panel. While AI's potential is vast, its current role is perceived somewhat skeptically. Hashan De Silva, CFA , Founder & Managing Partner of KP Rx , underscores AI's role in healthcare, noting that AI's impact on drug development is hindered by practical bottlenecks in clinical trials rather than the technology itself. "There are thousands of drug candidates sitting on the shelf," he notes, illustrating the challenge lies more in logistical execution than in the theoretical promise of AI enhancement.

Raj Gupta also identifies a pattern within technology sectors, where AI is predominantly applied to "cost reduction and efficiency" rather than significantly driving new revenue streams. Nevertheless, Steven Xu is optimistic about the strategic deployment of AI: founders need to focus on "the value proposition" of AI, ensuring its application is genuinely additive rather than superficial.

The wider implication of these discussions indicates a period of recalibration where AI’s role is evolving from a buzzword to a pragmatic tool for enhancing operational efficiencies. Industry leaders must weigh the promise of AI with practical applications that deliver measurable value and align with regulatory standards, particularly in healthcare.

Reflecting on the Path Forward

Through the lens of these discussions, one can foresee a landscape brimming with both challenges and opportunities. The shift towards liquidity-oriented valuations demands companies to be more strategic about long-term exits. Meanwhile, Australia's unique position within the global investment arena presents both a challenge and an opportunity for growth-stage companies aiming for international success.

Lastly, the burgeoning field of AI, though currently emphasising efficiency, remains a dynamic frontier offering potential for significant innovation. As investment strategies evolve, integrating AI into business operations could be pivotal in creating a competitive edge in the marketplace. These themes are interconnected,