Startups Opt for Longevity: The Shift Towards Staying Private Amidst a Rebounding IPO Market
As the initial public offering (IPO) landscape begins to show signs of recovery, a notable trend has emerged: startups are choosing to remain private for extended periods. This shift is largely attributed to the influx of alternative capital, which has transformed the financial ecosystem for emerging companies. Recent data reveals that the median age of companies going public has increased significantly, reflecting a broader trend in the startup world.
The Changing Landscape of IPOs
According to a report by Renaissance Capital, the median age of companies that have gone public in 2025 is now 13 years since their founding, a marked increase from the median of 10 years recorded in 2018. This trend is not merely a statistical anomaly; it underscores a fundamental shift in how startups approach growth and funding.
Jay Ritter, a finance professor at the University of Florida, has conducted extensive research on this phenomenon. His findings indicate that the average age of companies going public has more than doubled from 1980 to 2024. In 1980, the median revenue for IPO companies was approximately $16 million, equivalent to about $64 million in today’s dollars. Fast forward to 2024, and that figure has skyrocketed to a median revenue of $218 million. This dramatic increase highlights the maturation of companies before they decide to enter the public market.
The Rise of Unicorns
The term “unicorn” refers to privately held startups valued at over $1 billion, and their numbers have surged in recent years. As of July 2025, there are over 1,200 unicorns, according to data from CB Insights. Notably, OpenAI recently achieved a staggering valuation of $500 billion, surpassing SpaceX’s $400 billion valuation, making it the most highly valued private company in the world.
This growth in unicorns can be attributed to several factors, including the availability of substantial private capital. Analysts suggest that the regulatory burdens and short-term pressures associated with being publicly traded are significant deterrents for many startups. Instead, they are finding ample funding through alternative investments, which include venture capital, private equity, and family offices.
The Surge in Alternative Investments
The global landscape for private equity has seen remarkable growth, with assets under management increasing by over 15% annually over the past decade, now exceeding $12 trillion. Projections indicate that this figure could double to around $25 trillion in the next decade, according to Preqin. Similarly, venture capital assets in North America are expected to rise from $1.36 trillion in 2025 to $1.8 trillion by 2029, as reported by PitchBook.
Ritter emphasizes that one of the primary motivations for companies to go public has traditionally been to raise capital. However, the current environment offers numerous alternatives for startups to secure funding without the need for an IPO. Digital marketplaces like Forge Global and EquityZen are emerging as viable platforms for employees to sell shares of private companies, providing liquidity without waiting for a public offering.
The Case of Klarna
A prime example of this trend is Klarna, a Swedish fintech startup founded two decades ago. Klarna’s journey has been marked by significant fluctuations in valuation, peaking at $45.6 billion in 2021 following a funding round led by SoftBank. However, the company faced a dramatic decline in valuation, dropping to $6.7 billion in 2022. Despite these challenges, Klarna successfully went public last month, currently holding a market cap of $15 billion.
The trajectory of Klarna illustrates the complexities of navigating the private and public markets. While private equity and venture capital firms often argue that the most lucrative growth stages for startups occur in their early years, Ritter suggests that the reality is more nuanced. Although private investments have historically outperformed public markets, the influx of capital into alternative investments and the high valuations being paid could signal a turning point.
The Future of Startups and IPOs
As the financial landscape continues to evolve, the implications for startups and their funding strategies are profound. The traditional pathway to going public is being redefined, with many companies opting to delay their IPOs in favor of remaining private longer. This shift raises questions about the future of public markets and the role they will play in the growth of innovative companies.
Ritter notes, “Money flows into an asset class as long as there are abnormal returns. However, with so much capital flooding into the market, I don’t expect to see abnormal returns in the future.” This sentiment reflects a growing concern among investors about the sustainability of high valuations and the potential for a market correction.
Conclusion
The trend of startups staying private longer is reshaping the IPO landscape, driven by the availability of alternative capital and changing market dynamics. As companies mature before going public, the implications for investors, employees, and the broader economy are significant. The rise of unicorns and the increasing complexity of funding options suggest that the future of startups may look very different from what it has in the past. As the financial ecosystem continues to adapt, stakeholders will need to navigate these changes carefully to capitalize on emerging opportunities.
