The death of the IPO has been greatly exaggerated. Here's why.

Is private equity systematically buying up all high-quality small-cap companies? Certainly, that seems to be the prevailing narrative—and, in some quarters, it’s become an accepted idea that small cap companies are no longer brought to public markets because private equity always gets there first.

But our view is different. Putting that ‘received wisdom’ to one side—we believe the picture is more nuanced than the headlines suggest and that the death of the initial public offering (IPO) has been exaggerated. Here’s why.

Private capital is skewed towards tech

To understand the cause of the misconception we think it’s worth considering recent events in the tech sector. Here, while many acquisitions get press coverage, these investments are disproportionately concentrated in the technology sector, whether from private equity funds or from the mega cap tech companies.

However, other industries—particularly biotechnology—are experiencing a surge in public market participation too. Small-cap biotech firms are going public earlier than ever, and public holdings in this sector have reached unprecedented levels.

Our view is that this trend—of biotech firms continuing to find public funding to support their research and development efforts—is among the best counterarguments to the idea that private equity is absorbing all promising small-cap companies.

The IPO market remains robust

But it’s not just biotech. More broadly speaking, the IPO market is in good health. Yes, private equity funds are bigger than ever; in some cases they’re even bigger than the public markets by size and company numbers.

Yet, despite concerns about private equity dominance, the IPO market in the US has remained active and resilient. Since 2021, IPO activity has steadily increased, with 75 IPOs priced in 2022, 108 in 2023, and 150 in 2024.

Year-to-date figures for 2025 indicate $14 billion raised across 89 IPOs, with 108 filings—up 20% from last year. These numbers highlight a thriving IPO market, demonstrating that small-cap companies still find public markets attractive for capital raising and expansion.

Market forces will normalize IPO activity

Other factors come into play too. On the regulatory front we can expect to see deregulation help rebuild IPO pipelines. Elsewhere, we believe that, thanks to increased innovation and the strength of US capital markets, the IPO landscape will stabilize and grow.

History bears this out: while IPO cycles have fluctuated, the depth and resilience of US financial markets ensure that public offerings remain a viable path for small-cap companies seeking growth.

Conclusion

The idea that private equity is systematically privatizing all high-quality small-cap companies is misleading and, frankly, in our view, seems to indicate that we may be at or near the bottom of the cycle. Small cap companies currently trade at cheap valuations relative to large cap, and investors and pundits are piling on because of this.

While private equity remains influential, our view is that innovation in crypto, biotech and whatever innovation comes next will fuel the expansion of public markets.

The sustained strength of IPO activity, and the natural cycles of market normalization, show that small-cap companies continue to thrive in public markets. The narrative of private equity dominance fails to account for these broader trends, making it an incomplete assessment of the current financial landscape. Instead, to us at least, it feels like the type of pessimism you see at a cyclical bottom.