Startups are staying private longer thanks to alternative capital

Core Insights - The IPO market is rebounding, but startups are remaining private longer due to alternative capital sources [2][5] - The median age of companies going public has increased to 13 years in 2024, up from 10 years in 2018 [2] - Companies going public now have significantly larger revenues, with median revenue rising from $16 million in 1980 to $218 million in 2024 [3] Private Capital Trends - The number of unicorns has exceeded 1,200, with OpenAI valued at $500 billion, surpassing SpaceX's $400 billion [4] - Global private-equity assets under management have grown over 15% annually, reaching over $12 trillion, and are expected to double to around $25 trillion in the next decade [6] - Venture capital assets in North America are projected to rise from $1.36 trillion in 2025 to $1.8 trillion by 2029 [7] Reasons for Staying Private - Regulatory burdens and short-term pressures of public trading are driving companies to remain private [5] - New digital marketplaces for private company shares provide liquidity for employees, reducing the need for an IPO [8] Case Study: Klarna - Klarna, a Swedish fintech, was founded 20 years ago and saw its valuation fluctuate from $45.6 billion in 2021 to $6.7 billion in 2022, with a current market cap of $15 billion [9] - The company received funding from notable investors including Sequoia Capital and SoftBank [9] Market Dynamics - While private equity and venture capital have historically outperformed public markets, the influx of capital and high valuations may signal a shift in future returns [10][11]