A Market Already Signaling Dispersion
Apollo co-president John Zito has sparked fresh debate across private markets after openly questioning the reliability of current valuation marks, particularly in software and private credit. His remarks arrive at a moment when artificial intelligence is rapidly reshaping business models and investor expectations.
Zito is reinforcing a trend already visible within the Prime Unicorn Index. As one of the few structured datasets tracking late-stage private company performance, the Prime Unicorn Index has been capturing growing dispersion across software and technology companies, particularly as artificial intelligence reshapes competitive dynamics. Zito’s remarks bring that trend into sharper focus. “I literally think all the marks are wrong,” he stated, signaling a level of concern that is beginning to surface more broadly across institutional investors.
A Market Signal from the Inside
Zito’s comments are especially notable given Apollo’s scale and exposure across private credit and equity markets. His concerns center on whether current valuation marks, often based on lagged data and internal models, accurately reflect today’s economic reality.
This is not simply a critique of methodology. It is a recognition that the environment underpinning those valuations has fundamentally changed.
AI is altering cost structures, compressing competitive advantages, and introducing new uncertainty into long-term growth assumptions—particularly in software, a core component of private market portfolios and a major weight within the Prime Unicorn Index.
What’s Driving the Disconnect
The pressure is most acute in software and private credit, where underwriting assumptions were built during a period of stable growth and abundant capital.
Zito pointed to scenarios where recovery values on certain software-linked loans could fall materially below expectations, highlighting how quickly sentiment and fundamentals can diverge.
At the same time, private market valuation processes remain inherently backward-looking. Marks are typically updated quarterly and rely on comparable frameworks that may not fully capture real-time shifts in pricing power, margins, and demand. The result is a widening gap between reported valuations and market reality.
Why This Matters for Investors
For institutional investors, this disconnect introduces meaningful risk. When valuation marks are questioned, it impacts not just individual assets but broader portfolio construction and performance attribution.
Several challenges are becoming more visible:
- Lagged visibility: Valuations may not reflect current conditions
- Inconsistent methodologies: Marking practices vary across managers
- Limited benchmarking: Comparable private market data is scarce
- Hidden dispersion: Performance divergence is increasing beneath the surface
Data from the Prime Unicorn Index has already begun to reflect this divergence, particularly within software, where outcomes are becoming more company-specific rather than sector-driven.
From Marks to Market Context
Zito’s comments underscore a broader shift: investors are moving away from relying solely on internal marks and toward seeking independent, data-driven validation.
This is where the Prime Unicorn Index plays a critical role.
By aggregating and standardizing data across leading private companies, the index provides:
- Cross-company benchmarking to contextualize valuations
- Sector-level visibility into where disruption is accelerating
- Early signals of dispersion across business models
- Independent reference points for assessing fair value
Instead of evaluating valuations in isolation, investors can place them within a broader market framework.
The Bigger Picture & Takeaway
Private markets are not becoming less relevant, they are becoming more complex. As AI accelerates change and dispersion increases, the limitations of traditional valuation approaches are becoming more apparent. Zito’s statement may be direct, but it reflects a growing institutional reality: confidence in marks now requires validation through data.
Private markets are entering a phase where valuations are scrutinized, dispersion is rising, and technology is reshaping fundamentals. In that environment, the key question is no longer:
“What mark do I apply?” It becomes: “How does that valuation compare to the market?”
And increasingly, that answer starts with the Prime Unicorn Index.
–
–