Public investors are rewarding profitability, sector alignment, and valuation discipline, not just top-line growth. The IPO window remains narrow, demanding stronger fundamentals and clearer exit strategies.
After years of volatility, venture-backed IPOs are undergoing a structural reset in 2025. Despite high-profile offerings like Figma and Firefly Aerospace, only 18 US VC-backed companies completed listings in 1H25, as per PitchBook. This puts 2025 on track for the lowest IPO count in a decade. While market indices have recovered and valuations have stabilized, exit activity remains highly selective. The bar for accessing public capital has risen, and investors are recalibrating expectations on both timelines and outcomes.
A Sharper Focus on Financial Strength
The 2025 IPO cohort is financially stronger than in previous cycles. 25% of companies going public this year were profitable at the time of listing, as per PitchBook. The average revenue among these firms stands at $831 million, with four surpassing the $1 billion mark. In contrast, the class of 2021 saw widespread losses and far weaker fundamentals. While net losses persist at $58 million, overall financial quality has clearly improved.
Private companies have remained in the venture cycle longer, allowing them to grow revenues and control burn before listing. Chime, for instance, grew annual revenue by 65% over three years while improving margins, yet still accepted a 62% valuation cut at IPO. Meanwhile, Figma managed to list near its prior valuation without a down round due to strong growth and profitability. These cases highlight that listing success now hinges on financial maturity, not just growth.
Read more: Biopharma Venture Capital in 2Q25: Capital Concentrates in De-Risked Assets
Public Market Multiples Have Reset
Valuation expectations have corrected sharply from the 2021 peak. The median IPO valuation-to-revenue multiple is now 4x, down from 17x in 2021, as per Pitchbook. Companies are no longer able to rely solely on optimism or revenue growth to justify elevated valuations. Instead, investors focus on durability, the path to profitability, and execution discipline to support public pricing.
Figma stands out as a rare exception. It went public at a 20x revenue multiple, and first-day trading pushed that multiple to nearly 60x. However, its 48% revenue growth and profitability in 2024 justified this premium. Most other listings have seen more modest valuations. CoreWeave, for example, reported an $863 million loss at IPO. Current market valuations are favoring disciplined growth over unsustainable expansion.
Strategic Sectors Are Driving IPO Momentum
Strategic sectors such as AI, crypto, cybersecurity, fintech, drones, and space are dominating the IPO pipeline. Companies in these verticals are better positioned for public listings due to stronger investor demand, policy alignment, and defensible business models, which increasingly influence access to public markets. These sectors also continue to attract capital despite market selectivity. Reinforcing their importance in shaping IPO activity.
Databricks, Ramp, Glean, and Shield AI are among the top IPO prospects highlighted in these sectors. Underweighting these verticals increases exit risk for LPs and managers, as IPO outcomes are now more closely tied to sector-level momentum and investor conviction than to broad-based market reopenings. For venture investors, aligning portfolios with these strategic categories will likely improve both near-term exit visibility and longer-term performance.
Read more: Cybersecurity VC in 2025: Stability Amid Strategic Reset
Late-Stage Unicorns Lead Liquidity
A small group of late-stage unicorns accounts for a substantial share of potential liquidity among venture-backed companies, with valuations rivaling the total US VC exit value over the past two years, as per Pitchbook. Excluding mega-unicorns like SpaceX and OpenAI, this cohort reflects where IPO activity is most feasible in today’s selective environment. For investors, concentrating on these mature, market-aligned companies offers a more realistic path to liquidity than waiting on a broad reopening of the IPO window.
The Rise of the Opportunistic IPO
The IPO path is becoming more opportunistic and less linear. Several companies have gone public with limited private capital and without reaching profitability. Crypto platform Bullish raised just one primary private round in 2021 before its listing in August 2025. Voyager, a defense and space tech company reliant on government contracts, went public despite being unprofitable. These examples show that investor momentum and timing increasingly outweigh traditional maturity benchmarks.
This trend requires investors to reframe how IPO readiness is assessed. Sector narrative, policy alignment, and timing are now just as critical as financial metrics. Funds that can identify companies with strong thematic positioning will likely find themselves ahead of the market. As traditional valuation thresholds lose their signaling power, thematic conviction and market access strategy will determine which firms successfully exit.
Read more: Fintech’s AI Premium: Sustainable Advantage or Inflated Signal?
IPO Recovery Hinges on 2026
IPO activity will likely stay muted through the rest of 2025, with limited registrations and subdued monthly volumes. While Figma’s success has lifted sentiment, broader momentum will unlikely return until 2026 as investors wait for more stable macro conditions. Looking ahead, profitability, sector fit, and operational strength will remain essential. Access to public markets is still possible, but only for companies that meet today’s higher thresholds with clarity and discipline.
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