IPO window slams shut as capital stays private

The IPO window is slamming shut just as it looked like momentum was building again. A federal shutdown has left the SEC on skeleton staff, halting most approvals. Startups that had queued for their chance at the public spotlight are now on ice, and the pause comes after years of volatility and delays that already reshaped how companies think about going public.

But this isn’t just about timing. It’s about a deeper shift in where capital prefers to flow, and what it means for public investors when exits dry up.

After the best quarter for US IPOs in years, $36.4 billion in exit value, up nearly 3,000% year over year, the window has slammed shut. The SEC’s freeze means late-stage names like Navan, Wealthfront, and Ethos can’t proceed, and only those already priced (like Neptune Flood Insurance at $368 million) are sneaking through.

Even before the Washington gridlock, IPOs were proving unreliable. Nearly half of planned offerings in 2024 were postponed as valuations reset lower and regulation tightened. For startups, that meant longer waits for liquidity and thinner patience from investors and employees holding options.

The risks compound:

Why staying private looks better

At the same time, more companies are choosing to remain private. Deep capital pools from VCs, growth equity, and sovereign funds allow scaling without quarterly reporting. Secondary markets offer liquidity without ringing the bell. The median age of IPOs has stretched from 7 years a decade ago to more than 10 today.

And it’s not only startups: the number of US listed firms has halved in 25 years, as take-private deals outpace new listings. Private equity firms are scooping undervalued public companies, while boards increasingly see strategic freedom in operating away from public scrutiny.

The takeaway

IPO droughts highlight a structural reality. The center of gravity has shifted to private markets, and Washington dysfunction only accelerates that trend. For founders, the calculation is clear: wait longer, stay private, or sell outright. For investors, the game becomes tracking where those delayed exits will eventually reappear.

For public investors, IPO timing matters less than IPO performance. And the performance picture in 2025 has been surprisingly strong, even if narrow.

The problem is scarcity. With the SEC sidelined, the pipeline is drying just as investor appetite was warming. Exchanges like Nasdaq lose listing volume. Late-stage private equity and venture funds are forced to extend holds. And public buyers with cash, from strategic acquirers to private equity roll-ups, find more leverage in M&A negotiations.

The IPO drought is not just a startup story, it feeds directly into public market dynamics. Scarcity of new listings raises the value of listed peers, creates acquisition opportunities for incumbents, and hands negotiating leverage to public consolidators.

The investor angle is clear:

For allocators, the lesson is to look past the headlines about paused roadshows. The deeper story is the bifurcation of capital: private markets hold the companies, but public markets hold the leverage.