Companies are staying private because private money is now plentiful, public listing is costly and heavily regulated, Wall Street pressures them to think quarter by quarter, and many are bought out before they ever get to an IPO. In 1996 there were 739 IPOs in the US. Last year there were only 225. Thirty years ago more than 8,000 companies were publicly traded in the US, and today the number hovers around 4,000. Half.
This article walks through why a stock market listing used to be the ultimate milestone, the four reasons founders now skip it, and why some economists find the trend worrying.
Watch the full video here, or skip to the breakdown below.
The 4 reasons at a glance
- Why would a company go public at all? (0:43)
- What the upside of an IPO looks like
- The move to private (5:26)
- The rise of private money (9:14)
- Regulation and compliance (10:46)
- Short-termism (12:02)
- Mergers and acquisitions (13:37)
- The consequences for investors and competition (14:50)
Why would a company go public at all?
Picture a mechanic who runs a small company making car seats for a local luxury carmaker. Business is good, but he has designed an engine and cannot pay for the machines, factory space and staff out of pocket. So he sells 10% of the company to his richest friend, the engines sell like hotcakes, and Ford and Volkswagen become clients.
Then he wants to build whole cars, and not even all his rich friends together have that kind of money. That is the moment to go public with an Initial Public Offering, or IPO: a company’s first sale of stock to public investors.
A company is made of shares, tiny slices of ownership. In an IPO it creates a batch of new shares and sells them to the public. It first picks an underwriter, a bank that helps judge whether the company is ready, how much to raise, how many shares to create and at what price range. The night before trading starts, large institutions such as pension funds and mutual funds get the chance to buy at the IPO price. The money goes straight to the company, and the next morning regular investors can trade the stock.
Selling shares makes everyone’s slice a little thinner, but the company gets far more cash to work with. From then on it lives in public, posting quarterly results, answering analyst questions and dealing with the press.
Going public means trading some control and privacy for the resources and credibility to play on a much bigger stage.
What the upside of an IPO looks like
The script lists four reasons the trade has traditionally been worth it:
- Access to pools of money that do not exist in private fundraising, which can pay for factories, product lines, R&D and acquisitions.
- A clear path for founders, early employees and early investors to turn paper gains into real cash, at the IPO or gradually afterwards.
- Audited numbers, regular disclosures and a visible market price, which build trust with customers, partners and hires, and let the company use its stock as currency to buy businesses or reward talent.
- A shareholder base spread across thousands of investors instead of a handful of backers, which can make the company more stable.
The move to private
A chart of yearly US IPOs from around 1986 to 2024 shows spikes here and there but a clear downtrend. In the 80s and 90s an IPO was the ultimate milestone. Today the US has fewer publicly traded companies than at any time since the 1980s, and even hugely successful companies wait much longer. A generation ago a startup that reached a $1 billion valuation was virtually guaranteed to list.
Uber was founded in 2009 and grew to a valuation of over $60 billion before its IPO in 2019. Airbnb was founded in 2008, reached 100 million users in 2016 and did not list until 2020. Stripe, founded in 2010 and valued at just over $100 billion, seemingly has no IPO plans as of 2025. SpaceX, valued at over $400 billion, is the world’s most valuable private company, and Elon Musk has said he will not consider taking it public until there is a working colony on Mars.
The flow also runs the other way: previously public companies keep being bought out and taken private. Twitter is the example the script reminds you of.
The script names four major reasons for the shift, and says the more you look into them, the scarier things get.
1. The rise of private money
In the 1980s or 90s, a tech startup that wanted $100 million for its next growth stage had essentially one option: an IPO. Since then, private funding sources have exploded. Venture capital firms raise billions from wealthy individuals and institutions to back startups. Private equity firms raise even bigger funds to buy and grow companies without listing them. Sovereign wealth funds, the giant national investment accounts of countries like Saudi Arabia, Singapore or Norway, pour billions into private companies. Hedge funds and private credit providers lend or invest on top of that.
In plain English, there are now huge pools of money sitting outside the stock market. Founders can raise as much as they need, often more, without ever ringing the bell on Wall Street. The median age of a company at IPO was 6 years in 1980 and 11 years by 2021, so companies are now about twice as old, and generally far larger, when they list.
2. Regulation and compliance
After scandals like Enron and WorldCom in the early 2000s, Congress introduced rules meant to restore trust in public companies. CEOs and CFOs now have to sign off personally on their numbers, and companies must run internal audits to prove their books are clean. Transparency improved, but being public became far more expensive, especially for smaller firms.
Staying compliant can cost millions of dollars a year in paperwork, audits and disclosures. Public companies also need a formal board structure, investor relations and near-immediate disclosure of major events, and the process of listing is itself complicated. Some founders look at all of it and ask why they should bother, since private investors are willing to hand over the money anyway.
3. Short-termism
Once public, a company answers to Wall Street as well as to customers and employees, and Wall Street runs on a 90-day clock. Earnings are reported every quarter, and missing a target by even a penny can sink the stock. A slightly negative remark from a CEO on a call can become front-page news and wipe billions off the share price in an afternoon. Netflix lost more than 20% of its market value in one day after reporting fewer subscribers than analysts expected.
That pressure pushes leadership to think about the next three months instead of the next three or thirty years. A risky innovation that could be the next breakthrough may be held back because it would hurt this quarter’s earnings. Activist investors add to it: hedge funds that buy large stakes and then push management to cut costs, spin off divisions or sell the company.
Going public puts you on a treadmill of quarterly scrutiny that is hard to step off. Staying private allows patience without Wall Street’s constant judgement.
4. Mergers and acquisitions
Many companies that might once have listed are bought first. In tech, giants like Google, Apple and Meta have made a habit of scooping up startups before they IPO, partly for talent and technology and partly to stop rivals from rising. Facebook tried to buy Snapchat in 2013 for $3 billion, partly to prevent a competitor. Snapchat did not sell, but Instagram did.
Private equity firms play a large role too, buying companies that might have gone public, keeping them private and reselling them later. For some founders the plan from day one is no longer to build a company that lists, but to land a fat buyout offer from a bigger fish.
For those reasons, the number of companies choosing to go public keeps declining.
The consequences for investors and competition
Economists and regulators worry that regular people miss the early growth stage of a business, where the biggest gains often happen. Those gains now go almost entirely to private investors who were already wealthy, so the stock market may offer fewer high-growth opportunities to everyday people while the wealth created by innovation concentrates in fewer hands.
The regulations that push companies away exist for a reason too. They protect investors, keep consumers safe and help prevent the fraud and collapses that destroyed companies like Enron. Massive private companies face less oversight, so their problems can stay hidden until it is too late, as the FTX and Sam Bankman-Fried case showed.
Acquisitions carry their own risk. Adobe has a long history of buying competitors and shutting down their products to stay dominant in creative software. In 2022 it tried to acquire Figma for $20 billion, and regulators blocked the deal. Figma has since gone public at a valuation higher than Adobe’s offer, and the two now compete head to head, which the script says means more innovation for users. When more companies get absorbed into giants, you get less competition, less innovation and more power in a few hands.
So are IPOs dead?
IPOs are not extinct, but they have changed. The US still has the deepest capital markets in the world, yet companies tap them differently. For decades, going public was how a company got big. Today most companies only go public once they are already big.
There are costs on one side: regular investors get fewer chances to ride the early growth wave, private companies face less scrutiny, and industries risk being dominated by a handful of giants. On the other side, private markets have made huge amounts of capital available and given founders the freedom to grow on their own terms. The script leaves the final question open: is this a good thing or a bad thing, and will IPOs make a comeback?
FAQ
Why aren’t companies going public anymore?
The script gives four reasons: private money from venture capital, private equity, sovereign wealth funds and hedge funds is plentiful; public listing brings costly regulation and compliance; public companies face quarterly short-termism; and many startups are acquired before they ever reach an IPO.
How many IPOs are there now compared with the past?
There were 739 IPOs in the US in 1996 and only 225 last year. Publicly traded US companies have also fallen from over 8,000 thirty years ago to around 4,000.
What is an IPO?
An Initial Public Offering is a company’s first sale of stock to public investors. The company creates new shares, an underwriter bank helps set the amount and price, and the money raised goes to the company.
Why does it matter if companies stay private longer?
Regular investors miss the early growth stage, where the biggest gains often happen, because those gains go mostly to wealthy private investors. Large private companies also face less oversight, so problems can stay hidden longer.
How much older are companies when they go public now?
The median age at IPO was 6 years in 1980 and 11 years by 2021, so companies are about twice as old, and generally far larger, when they list.
Are there big companies that have chosen to stay private?
Yes. Stripe, valued at just over $100 billion, seemingly has no IPO plans as of 2025, and SpaceX, valued at over $400 billion, is the world’s most valuable private company.
Keep reading
