For decades, an initial public offering (IPO) has been considered the pinnacle of corporate success — a ceremonial entry into public markets that promised prestige, liquidity, and growth. But in recent years, a quiet revolution has changed the financial landscape. Companies remain private longer, abandoning traditional IPOs in favor of alternative financing mechanisms.
To understand this shift, we spoke with Dmitrii Khasanov, founder of the Arrow Stars investment fund and a digital marketing strategist with ten years of experience in private and public markets. His ideas challenge conventional wisdom about the future of capital formation.
The IPO’s golden era—and its slow decline
The IPO process, which was once almost mandatory for large companies, has lost its appeal. Historically, going public provided companies with unparalleled access to capital, heightened visibility, and a currency (shares) for acquisitions and employee incentives. However, PitchBook data shows that the number of U.S. public companies has halved since the 1990s, despite the fact that the value of shares in the private market is growing rapidly. Startups like SpaceX, Stripe, and Epic Games have achieved unicorn status—and beyond—without ever ringing the opening bell.
Khasanov attributes this trend to a fundamental reshaping of risk and reward. He notes that the IPO was never just about raising money. It was a strategic move to legitimise a business. But today, private capital is so abundant that companies no longer need Wall Street’s validation to scale. He points to the explosion of venture capital, private equity, and crossover funds—which collectively poured over $1.2 trillion into private markets in 2023—as evidence of a self-sustaining ecosystem.
Why privatisation is winning
The withdrawal from public markets is explained by several factors. First, maintaining private ownership allows companies to avoid quarterly profit and loss reports. Khasanov argues that public companies have fallen into the trap of short-termism. Private firms can prioritise research and development, long-term projects, or even unprofitable growth strategies without having active shareholders breathing down their necks.
Regulatory requirements also play a role. Compliance with Sarbanes-Oxley and SEC reporting requirements costs public companies an average of $2.5 million per year, which is a deterrent for small firms. Meanwhile, alternative liquidity options such as secondary markets and direct listings offer investors to enter the market at the initial stage without the fanfare (or fees) associated with an IPO. Even specialised acquisition companies (SPAC), despite their recent disagreements, emphasise the market’s desire for flexibility.
But perhaps the most important factor is the democratisation of private investment. Platforms such as AngelList, Forge, and Republic have opened up early-stage opportunities for retail investors, blurring the lines between public and private participation. “The old gatekeepers are losing control,” Khasanov says. “A Silicon Valley technology founder can now raise $100 million from institutional foundations and individual backers with a single app. Why put up with this whole IPO circus?”
The investor perspective: Opportunity or exclusion?
While privatisation benefits companies, its impact on investors is mixed. Institutional players and high-net-worth individuals relish access to high-growth startups, but average investors are often left behind. Pre-IPO shares of companies like OpenAI or Discord can yield astronomical returns, yet these opportunities rarely trickle down to Main Street portfolios.
Khasanov acknowledges the imbalance but sees innovation on the horizon. “Tokenization and blockchain-based securities could democratise private markets further,” he suggests. “Imagine a world where retail investors buy fractional shares in a pre-IPO startup as easily as they trade stocks on Robinhood.”
However, the risks are plentiful. Private markets lack the transparency and liquidity of public exchanges, raising concerns about valuation bubbles. The failed IPO of WeWork and the technological correction of 2022 serve as warnings. “Privatisation is not a panacea,” warns Khasanov. “Without discipline, companies risk becoming overrated paper giants that impress in presentation but are vulnerable to being tested in practice.”
The case for the IPO’s survival
Despite these shifts, declaring the IPO obsolete would be premature. Public markets still offer unrivaled liquidity, global brand exposure, and the ability to raise capital at scale. Iconic brands like Airbnb and Snowflake chose IPOs during the 2020–2021 boom, leveraging bullish investor sentiment to achieve record valuations. Khasanov concedes that certain sectors—biotech, clean energy, and AI infrastructure—may always rely on public funding for capital-intensive projects.
Moreover, geopolitical factors could revive interest in IPOs. As interest rates stabilise and inflation eases, renewed investor confidence might fuel a resurgence. “Market cycles are inevitable,” Khasanov remarks. “The IPO won’t vanish—it will evolve. We might see more hybrid models, like phased public listings or dual-class shares that let founders retain control.”
A new ecosystem emerges
The IPO’s golden age may be fading, but its legacy endures. Public markets remain a critical tool for economic growth, even as private alternatives reshape the playing field. For companies, the calculus has simply expanded: Going public is no longer the default but one of many paths to success.
As Dmitrii Khasanov summarises, “The IPO isn’t dying—it’s being redefined. The companies that thrive will be those that choose their investors as carefully as their customers.” In this new era, agility and strategic alignment matter more than tradition. And for investors, the challenge—and opportunity—lies in navigating a world where the rules of capital are being rewritten in real time.
