At the start of 2025, an increase in dealmaking activity relative to recent years was expected, but hopes were dashed in the wake of changing U.S. trade policy that led to significant market volatility.
As a result, several initial public offerings from private-equity-owned companies, especially those related to technology, were postponed. IPO activity remained muted through the first half of the year, but recent deals show that public listings are rising
According to EY, approximately 109 IPOs occurred in the first half of the year, far more than the 81 in the first half of 2024. Last year finished with a total of 176 IPOs, up from a recent low of 90 in 2022, but still far fewer than the 416 in 2021.
This year, Klarna, Datadog, StubHub, Chime and others reportedly paused their IPO plans. Circle Internet Group, a stablecoin and blockchain platform and market provider, and Israeli trading and investing platform eToro had initially paused their IPO plans, but each proceeded with listings in June and May, respectively.
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EY noted that 2025’s second quarter was a strong one for IPOs, with 50 IPOs raising $8.1 billion. The number of IPOs rose 16% compared with the Q2 2024, but gross proceeds declined by 20%.
“The first half’s IPOs that reopened the market successfully have traded well and created a more constructive backdrop for the next round of IPOs,” wrote Arnaud Blanchard, global co-head of equity capital markets at Morgan Stanley, in a report.
The July 31 IPO of design software company Figma represented a windfall to its early venture capital investors, which included Index Ventures, Sequoia Capital, Kleiner Perkins, A16z and Greylock Partners, at a time when exits have otherwise slowed down. Shares of Figma started at $85 per share on the stock’s first day of trading, marking a $50 billion valuation for the company, more than doubling its IPO price of $33 per share and eventually reaching a high of $142.92 per share in days.
Stablecoin issuer Circle went public at $60 per share in June, greater than its IPO price of $31, eventually rising more than 170% in its first day of trading and later rising to a high of $298.88.
“We are entering the second half of the year with a renewed sense of optimism in the IPO market on the back of a number of high-profile deals that priced well and traded extremely well in the aftermarket,” wrote Mark Schwartz, EY’s Americas IPO and SPAC advisory leader, in the report. “If broader market volatility remains in check, we could see larger deals continue to come to market and the multi-year IPO market recovery continue to unfold.”
What Will Keep the Market Moving?
Between 2020 and 2021, many venture capital investments were made at very high valuations, with some late-stage venture capital investors now underwater on the investments they made before markets fell in 2022. Despite recent high profile IPOs, some companies’ valuations remain below the levels at which some investors bought in.
“If the IPOs succeed [and] stock [prices trade] up on a sustained basis, we may see more companies going public, despite the fact that the IPO valuations may be below what some late-stage VCs paid to get the exposure in 2020-21,” says Faraz Shooshani, managing director of and a senior private markets consultant at Verus.
There is a big backlog of unsold companies in which venture capital firms are invested or are portfolio companies of private equity investors. According to McKinsey & Co.’s “2025 Global Private Markets” report, the backlog of private equity-backed companies is larger now than at any point in the last two decades. These investors will eventually have to exit.
“Over the next several years, there are large private assets—many of which are owned by financial sponsors—that must come public in some way,” wrote Eddie Molloy, global co-head of equity capital markets at Morgan Stanley, in a report.
Some investors have turned to continuation vehicles and the secondary market to alleviate the slowdown in distributions to LPs.
“Terms negotiated by late-stage investors back in 2020-21 have held companies back from going public, but we are seeing some flexibility on [late-stage investors’] part as more and more LPs seek distributions from those investors,” Shooshani says. “If they can’t get them from the GP, are willing to sell their position in the secondary market at a discount.”
For venture investors, secondary sales are priced at significant discounts to the funds’ net asset value. According to Jefferies’ “2025 Global Secondary Market Review,” venture secondary stakes are trading at 78% of NAV, while most other alternative asset classes are trading above 90%.
Morgan Stanley, in a report, noted that more companies are choosing to stay private, with investors more willing to fund private companies. Despite this, a thawing IPO market could mean investors that have waited on the sidelines for an exit could take the IPO path.
“There will, without a doubt, be a rush to the exits. If the IPO market becomes frothy, there will be those on the sidelines who jump right in,” says Shashank Sripada, CIO of Marcena Capital and co-founder of AI firm Gaia. “This is when we will really know how sustainable the demand is and whether it is more cherry-picking the winners or a full-scale sentiment shift toward the public markets.”
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