The Rise of Alternative Capital and Its Impact on the Age and Valuation of Companies Going Public
As the IPO market shows signs of recovery, a growing trend reveals that startups are choosing to remain private for increasingly longer periods. New data highlights that the median age of companies going public in 2025 has climbed to 13 years, a notable rise from just 10 years in 2018, reflecting a strategic shift among founders and investors.
Research from Renaissance Capital and renowned academic Jay Ritter of the University of Florida underscores a significant evolution over the past four decades: the average age of public companies has more than doubled since 1980. Simultaneously, these firms are entering the public markets with substantially higher revenues. Where IPO-bound companies once had median revenues of $16 million (approximately $64 million adjusted for inflation in 2024), that figure has surged to $218 million today.
This trend coincides with the explosive growth of “unicorns” — private companies valued at over $1 billion — which now number more than 1,200 globally. Notably, OpenAI recently surpassed SpaceX in valuation, hitting an astonishing $500 billion after a recent employee share sale.
Analysts attribute this shift not only to regulatory pressures and the demands of public markets but also to the surging availability of alternative capital sources. Sovereign wealth funds, family offices, venture capital, private equity, and private credit firms are fueling startups with ample funding that diminishes the need for early public listing. Private equity assets under management have soared at an annual rate exceeding 15% over the past decade, reaching over $12 trillion and expected to nearly double in the coming ten years.
Venture capital alone is projected to grow from $1.36 trillion in North America in early 2025 to $1.8 trillion by 2029. “One of the main reasons companies went public was to raise capital,” says Jay Ritter. “Now, there are many viable alternatives that provide liquidity and growth prospects without the burdens of public markets.”
Innovations such as digital marketplaces for trading equity stakes in private companies — including platforms like Forge International and EquityZen — have introduced liquidity options for employees and early investors, further reducing IPO urgency.
Take Klarna, the Swedish fintech giant. Founded 20 years ago, it navigated volatility in valuation, soaring to $45.6 billion in 2021 after a major funding round led by SoftBank, only to see its valuation tumble to $6.7 billion in 2022. Its recent IPO, however, established a current market cap near $15 billion, backed by heavy investments from top-tier venture firms and family offices.
While private equity proponents argue that startup growth and value creation occur predominantly in private stages, Ritter cautions that the influx of capital into private markets might be reaching a tipping point. “Money flows into asset classes as long as there are above-average returns,” he notes. “But with so much capital chasing deals, extraordinary returns may become harder to find.”
This dynamic reshapes the financial ecosystem, signaling a new era where private firms mature longer, are better capitalized prior to IPO, and redefine the traditional pathways to public markets and liquidity.
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