G Squared's seventh fund has secured $2.3 billion. It has already seeded the vehicle with positions in Anthropic PBC, Polymarket, Mercor and Nscale.
Founder Larry Aschebrook views the new pool of capital as a war chest to exploit a possible pullback in private valuations late this year and early 2027, when he expects higher interest rates.
"We think there is some settling that will come in multiples, and we need to have the dry powder to take advantage of that versus chasing every hot AI name," Aschebrook said.
Bloomberg News has reported that G Squared joined Polymarket's roughly $1 billion financing, which closed in April and valued the company at $15 billion.
As companies stay private for longer, the private secondaries market has grown. Jefferies Financial Group Inc. counted $240 billion in private secondaries deals last year.
SpaceX's record-setting IPO came at a valuation well above the levels at which it had raised private money for more than a decade, delivering outsized returns to tech investors.
Get the free Always Be Buying eBook and learn the simple system for building wealth on any income
PitchBook data show 945 active private companies were valued at $1 billion or more in the second quarter, a group worth $5.3 trillion in aggregate.
Aschebrook says the market is overheated. Rivals are "chasing every hot AI name," he said, and that has pushed valuations higher.
When secondary and primary valuations converge, he treats it as a warning sign.
"When you see secondary and primary valuations converge, like is common now, that's a leading indicator that the market is too hot and we need to slow deployment," Aschebrook said.
G Squared's sixth fund holds positions in Claude chatbot maker Anthropic, Fanatics and Physical Intelligence. It also had a Wiz stake before Alphabet Inc. bought the company for $32 billion earlier this year, along with X-Energy Inc., which listed in April and has dropped 19% from its debut.
He expects businesses to remain private unless they need cash, and he sees secondaries as a way for long-term investors to sell holdings. Beyond blockbuster deals like SpaceX, investors are "starved for liquidity," Aschebrook said.
So the firm plans to add to existing positions and build new ones slowly, waiting for a cooling-off he believes is necessary.
"It's time to chill out a bit and we'll definitely do that," he said. "We'll slow deployment, pick our spots and wait for the correction - which we think is coming."
Aschebrook's caution is notable after years of fast fundraising into AI-heavy startups. Many growth investors have written large checks early, but a $2.3 billion fund that intends to wait gives G Squared the ability to act after a correction. The firm's focus on secondaries means it does not need to wait for IPOs; it can buy existing shares from employees and early backers. With private companies in the PitchBook data holding $5.3 trillion in combined value, buyers with cash on hand could have plenty of options.
That mix of outcomes is part of why Aschebrook says he is staying patient.
Since G Squared began investing in 2011, it has built a portfolio of more than 170 companies and more than a decade of late-stage experience, informing its choice to wait for lower entry prices.
Download the free Always Be Buying eBook and start putting your money to work today