A few months ago, after years of abysmal performance, it looked like IPOs were finally set for a comeback. ServiceTitan, a software platform for general contractors, saw its stock soar by 35% after its debut in December. A bunch of hot companies were lined up to go public: the buy-now, pay-later lender Klarna, the ticket reseller StubHub, and the AI infrastructure provider CoreWeave. Silicon Valley, it seemed, was about to return to the good old days, when snazzy new startups could expect a huge payoff on Wall Street. “All signs were pointing to 2025 as the year when we would finally get some IPOs,” says Matt Kennedy, a senior strategist at Renaissance Capital.
But now, the long-anticipated boom in IPOs has suddenly gone bust. CoreWeave’s public offering in March was the biggest tech IPO since 2021, but it was forced to price itself well below the expected range. And on Friday, StubHub and Klarna both delayed their planned IPOs, as Donald Trump’s tariffs sparked a huge slide in the stock market. IPO analysts at Renaissance now estimate that there could be as few as 150 deals this year, which would make 2025 the fourth straight down year for IPOs.
“This is going to shut down the IPO market,” Kennedy says. “The question is, for how long?”
The Great IPO Depression is bad news for everyone. With public offerings continuing to sputter, founders and venture capitalists have less of an incentive to innovate and take risks. At the same time, mom-and-pop investors have fewer chances to strike it big with the next Facebook or Airbnb. While their pensions may be invested in high-growth companies through venture capital funds, they aren’t able to get in on the game directly, further deepening the divide between the stock market haves and have-nots.
“Yet again, we are sequestering the majority of the upside of our prosperity to the private markets that consist mostly of 0.1 percenters and institutional investors,” Scott Galloway, an entrepreneur and marketing professor at New York University, recently observed. As long as IPOs remain stagnant, average Americans have few ways to share in Silicon Valley’s wealth.
The numbers show how bleak things have gotten. In 2021, 311 companies raised a record $119 billion. From there, things went off a cliff. Over the next three years combined, according to data compiled by University of Florida professor Jay Ritter, 164 companies raised only $39 billion. For most startups, the promised land of Wall Street was no longer an option.
The continued slump in IPOs has bankers, venture capitalists, and investors wondering if a more permanent shift is underway. The most obvious change is that high-profile companies don’t need the public markets in the same way they once did — they can raise all they want from private investors and avoid the scrutiny that comes with being a publicly traded company. Examples abound: SpaceX is buying back its own stock. Stripe has made clear it sees no need to rush into the public markets. OpenAI, one of the fastest-growing companies in history by revenue, remains in private hands.
“Companies are staying private for longer in part because there is so much availability of capital in the private sphere,” says Craig Coben, the former global head of equity capital markets at Bank of America Merrill Lynch. “They don’t have to deal with all the complications and obligations of being public.”
But while high-profile companies can afford to stay private, smaller startups are having a hard time going public. “There is a class of companies that can have very successful IPOs and early public lives,” says Jeremy Abelson, the founder and CEO at Irving Investors, which owns venture investments as well as public equities. But the “vast majority” of companies in the IPO pipeline, he adds, face challenges that make it tough for them to make a name for themselves in the market.
Case in point: There are fewer sell-side analysts researching small companies than there were during the IPO boom 25 years ago. Complex algorithms, rather than an actual person reviewing balance sheets and financial statements, determine which companies to bet on. And that means it’s harder for startups to get the exposure they need to attract investors.
Another barrier to IPOs is the widespread economic uncertainty that’s been generated by the Trump administration. “It’s really hard to go public in a market this volatile,” says Kennedy, the Renaissance Capital analyst. “Nobody knows what anything’s worth.” Going public requires a company to project its future growth — and that’s hard to do in the midst of a trade war whose targets seem to shift on an almost daily basis. And when growth is slow, companies have less of a cushion to meet investor expectations, making it much more likely they might miss a quarterly performance metric.
“Back in 2020 and 2021, it was easy,” says one banker who asked for anonymity because he wasn’t authorized to speak publicly. “You were able to lock in 30% growth from your existing customer base. Now, your growth relies on new customers — and that is far less certain.”
But another reason for the slump in IPOs, analysts say, may be the unrealistic expectations of investors. The boom times of just a few years ago created the impression that public markets could ask for the moon — and get it. Yet as outlooks have softened, investors continue to expect sky-high payoffs from IPOs. As a result, plenty of companies that would like to go public find themselves struggling to generate the enthusiasm they need to do so successfully.
“We’ve had a very tough stretch in private markets, and some of it has been self-inflicted,” says one Bay Area venture capitalist who wasn’t authorized to speak on the record. “The valuations of hot companies back in the 2021 time frame got so far ahead of themselves that a lot of them haven’t even grown into those.” Translation: Companies overpriced themselves during the boom years — and investors continue to expect the astronomical growth rates they were promised, even though the numbers were never realistic in the first place.
So, what could spur a more robust market for IPOs? If the market manages to recover from its anxiety over Trump’s tariffs, companies would likely need to lower their valuations, bringing them more in line with the post-boom era. That’s what Klarna did back in 2022 when it raised money by cranking its valuation down to $6.7 billion — a staggering 85% decline from a year earlier. While the drop in valuation was painful for early investors, it set the stage for an IPO that was expected to be priced as high as $20 billion before the current market turmoil postponed the offering. If IPOs recover, analysts say, other companies may have to follow suit if they hope to attract jittery investors. “Without taking some kind of a haircut or a big restructuring, it may be difficult for them to go public,” says Kamran Ansari, a venture capitalist who was head of corporate development and strategy at Pinterest.
Despite the continued slump in IPOs, some investors are holding out that things will rebound in the second half of the year. “We’ve got a very large pipeline of deals that have lined up to go public,” says Kennedy. “When markets recover, or at least stop falling, we’ll have that backlog. I think we’ll start to see activity emerge. I just don’t know when.”
Dakin Campbell is a chief correspondent on Business Insider’s investigations team. He is the author of “Going Public: How Silicon Valley Rebels Loosened Wall Street’s Grip on the IPO and Sparked a Revolution.”
