Startups Stay Private Longer as Alternative Capital Surges
Companies are remaining private for a longer period, fueled by a significant increase in alternative investment capital, according to new data released today.
The median age of companies going public this year is 13 years since founding, up from 10 years in 2018, according to Renaissance Capital. A recent study by University of Florida professor Jay Ritter found that the average age of companies launching an IPO has more than doubled between 1980 and 2024. These companies are also entering the public market with substantially larger revenues; the median revenue for IPOs reached $218 million in 2024, compared to $16 million in 1980 (adjusted for inflation). This trend impacts investors, as it delays access to potentially high-growth companies.
The number of “unicorn” companies – privately held businesses valued at over $1 billion – has surpassed 1,200 as of July, with OpenAI recently surpassing SpaceX as the world’s most valuable private company at a $500 billion valuation. Analysts attribute this shift to the burdens of public market regulations and short-term pressures, but also to the availability of substantial capital from sources like sovereign wealth funds, family offices, and private equity. Global private-equity assets under management have risen over 15% annually over the past decade, exceeding $12 trillion, and are projected to double to around $25 trillion in the next decade, according to Preqin.
“One of the main reasons for going public is to raise capital,” Ritter said. “Now there are a lot of good alternatives to raising capital without going public.” He also noted the emergence of digital marketplaces like Forge Global and EquityZen, which provide liquidity for employee equity without requiring an IPO. The experience of Klarna, the Swedish fintech firm founded 20 years ago, illustrates this dynamic; after a valuation peak of $45.6 billion in 2021, its valuation dropped to $6.7 billion in 2022 before going public last month with a current market cap of $15 billion. You can learn more about alternative investments here.
Ritter cautioned that the surge in capital into alternative investments may not sustain the historically high returns seen in private equity and venture capital, suggesting a potential turning point in the market.
