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For decades, initial public offerings (IPOs) were seen as the ultimate milestone for growing companies. Now, many of the world’s most valuable startups are choosing to skip the stock exchange.
SpaceX, OpenAI, and Stripe are among a growing number of high-profile companies opting to stay private longer, or indefinitely. For retail investors, that means fewer opportunities to invest in tomorrow’s leaders before they mature.
But this shift isn’t just about delayed debuts. It reflects a deeper transformation in how companies fund growth, and where investors can try to find it.
Key Takeaways
- Companies like SpaceX and OpenAI are choosing to stay private, limiting public investors’ access to high-growth opportunities.
- Amid the dearth of IPOs, a booming private market has emerged as a popular funding source, with large private equity and venture capital funds leading the charge.
- Experts warn the IPO slowdown may persist due to tougher economic conditions and a glut of capital in private hands.
The Death of the IPO
The number of publicly listed U.S. companies has fallen by about half since the mid-1990s, and the pace of IPOs has fallen sharply in recent years. In 2024, there were 150 IPOs for firms valued at $50 million or more—down from a record of 397 in 2021, when high-flying firms like electric-vehicle maker Rivian (RIVN) and cryptocurrency exchange Coinbase (COIN) went public.
John Blank, chief equity strategist at Zacks Investment Research, believes that the landscape has changed dramatically. “Public market investors are now more focused on a company’s profitability and sustainable growth rather than just prospective growth,” he said.
That contrasts with the speculative growth focus that dominated the dot-com bubble. In addition, the IPO boom in 2021 brought forward many public-market debuts but left “a smaller pipeline of high-quality companies ready to go public in subsequent years,” Blank said.
Fast Fact
Amid the slowdown in IPOs, the private market has been booming. The State Street Private Equity Index now represents more than $5.7 trillion in value, more than five times its committed capital of $1.1 trillion when it launched in 2007.
The Billion-Dollar Companies Opting Out
Instead of going public, many high-value companies seek funding from massive private equity and venture capital firms. “The substantial growth in capital managed by large private equity and private credit firms provides a viable alternative to public market funding,” Blank said.
That reduces the pressure for companies to go public, especially when they can secure funding without the scrutiny of quarterly earnings calls and increased regulation.
These private giants include Elon Musk’s SpaceX, which has raised billions without issuing a single share to public investors. According to Bloomberg, the company is in talks to sell insider shares at a valuation of roughly $400 billion—more than McDonald’s (MCD) and Boeing (BA) combined—without ever listing on a stock exchange.
This privacy-first mindset has created a class of companies with vast reach and revenues, but no set plans to enter the public markets. Others include payments giant Stripe, which recently completed a tender offer that valued the firm at $91.5 billion, and OpenAI, which nabbed a $300 billion valuation in March after a fresh round of funding led by SoftBank.
Important
In the U.S., a company worth more than $10 million is required to go public if it has either:
- 2,000 or more shareholders of record
- 500 or more shareholders of record who are not accredited investors
The Ripple Effects for Your Portfolio
For individual investors, this trend presents a growing challenge when it comes to access.
“Traditional access to growth investments, particularly in areas like private equity, has historically been limited to institutional and high-net-worth individuals,” Blank said. And while some options like exchange-traded funds can mimic private equity exposure, they may not be enough to fill the gap.
Even if IPOs make a comeback, don’t expect a return to the old normal. “Subdued IPO markets rarely last for more than a few years,” Blank said. “However, this time is different in meaningful ways, and they are not favorable.”
He points to tariff-induced obstacles for smaller companies, yielding slower economic growth and persistent volatility, as signs that the IPO era may be due for more headwinds. “This is likely to get worse, not better now,” he said.
The Bottom Line
Companies that stay private are great for their founders and early investors, but they leave retail investors with fewer chances to buy in early.
As the IPO market shrinks, it’s more important than ever to diversify your portfolio thoughtfully and proceed with caution when it comes to newer vehicles like private equity ETFs. If you’re chasing growth, be sure you know what’s inside the wrapper, and don’t fall for hype as the market figures out its new normal.
