November 2025
The post-pandemic venture winter precipitated a pronounced contraction in U.S. IPO activity, with both the number of listings and aggregate capital raised declining sharply. In 2021, the U.S. exchanges hosted 1,035 IPOs; by 2022, that figure had plummeted to just 181. However, a visible reversal began in early 2025. According to StockAnalysis.com, the number of IPOs in the first half of 2025 nearly doubled year-over-year. Similarly, Reuters reports that companies raised approximately $25 billion during this period—significantly surpassing the $18 billion recorded in the same timeframe of 2024. Concurrently, activity in the SPAC sector has also reaccelerated.
Looking ahead to 2026, the IPO markets appear poised for a sustained recovery, underpinned by a confluence of favorable external conditions, AI-driven improvements in corporate profitability, continued monetary and fiscal stimuli, and pent-up demand from high-growth private firms that have deferred public listings.
This emerging wave of IPOs is being dominated by technology firms involved in AI infrastructure, cybersecurity, crypto, biotechnology. In contrast, traditional sectors are adopting a more selective and cautious approach. The renewed appetite of institutional investors—coupled with the Fed’s shift toward monetary easing and improved market liquidity—has fostered a conducive environment for equity offerings. That said, valuations remain disciplined relative to the exuberant levels witnessed during 2020–2021, which were amplified by extraordinary pandemic-era stimulating measures.
1. Macroeconomic Environment
Despite widespread expectations throughout 2025, a formal recession has failed to materialize. This resilience is notable given that several leading indicators—such as the resolution of the prolonged yield curve inversion in early 2024—historically precede economic downturns. The U.S. economy has exhibited robustness in the face of external shocks, including the new administration’s imposition of tariffs and a long government shutdown.
The Fed formally commenced its rate-cutting cycle in December 2024 although the pace of easing meaningfully accelerated only in the second half of 2025. The transmission effects of lower policy rates remain in their incipient phase. A substantial volume of capital—approximately $7.5 trillion—is currently immobilized in money market funds only and in many other fixed-income instruments. In 2026, a portion of this liquidity is expected to rotate toward riskier assets, including equities of newly listed companies.
Inflation, while persistently above the Fed’s 2% target, has stabilized at levels deemed manageable, thereby permitting the continuation of the rate-cutting trajectory. Quantitative tightening (QT) is scheduled to conclude entirely on December 1, 2025. Market participants are already speculating about a potential resumption of balance sheet expansion—effectively signaling a return to quantitative easing (QE).
The monetary aggregate M2 continues its steady expansion, reaching $22.21 trillion as of September 2025. Should the aforementioned policy measures be fully enacted, M2 could experience a pronounced upward inflection.
Fiscal policy remains highly accommodative, with the federal budget deficit projected at approximately 6% of GDP—representing a significant fiscal stimulus.
The Trump administration is systematically advancing its campaign platform, which includes further reductions in corporate and individual tax rates, deregulation of business activity, protection of domestic markets, normalization of international trade relations, reinforcement of the U.S. dollar’s role as the global reserve currency, legislative recognition of crypto-assets, and an explicit target for the Fed policy rate below 1%. Collectively, this agenda is perceived positively by financial markets.
In sum, the macroeconomic and political landscape in late 2025 is markedly supportive of a revival in IPO market activity.
2. A Deep Pipeline of IPO Candidates
It is also worth noting that the venture winter has led to a significant buildup of strong IPO-ready companies that have been forced to delay their public listings due to frozen market conditions.
This backlog is suppressing private company valuations amid a rally in public equities, as insufficient transaction volume prevents accurate market-based pricing of private businesses. Most high-quality private technology firms remain significantly undervalued relative to their public peers. However, this discount is unlikely to persist indefinitely. Institutional capital is expected to correct this mispricing sooner rather than later.
3. AI Drives Corporate Profitability
Another key catalyst for the upcoming IPO wave will be rising revenues and margins among private companies driven by wider AI adoption. Unlike the 2021 boom—fueled by massive pandemic-era monetary stimulus, which saw virtually any company go public—the 2026 IPO cohort is expected to demonstrate solid, attractive profitability.
AI enhances profitability by reducing costs through automation and operational optimization, while simultaneously boosting revenue via improved customer experience and dynamic pricing. According to McKinsey research, AI-adopting companies can cut costs by 20% or more across various functions and increase revenue by 10% or higher. For example, JPMorgan forecasts that S&P 500 earnings will grow by 11% in 2025 and by additional 13% in 2026, with AI serving as a significant contributor to this growth.
4. Specific Indicators
Several indicators further support a favorable outlook for IPO activity:
Goldman Sachs publishes its proprietary GS IPO Issuance Barometer, which assesses the macroeconomic environment’s suitability for IPOs. The index is calibrated such that a reading of 100 separates favorable conditions from unfavorable, based on historical IPO data spanning many years. The barometer incorporates five components: S&P 500 performance, CEO confidence levels, the ISM Manufacturing Index, changes in 2-year Treasury yields, and the EV/Sales multiple of S&P 500 companies. As of now, the barometer stands at 134.2, signaling a highly favorable external environment for IPOs.
Another critical benchmark for the venture ecosystem is the BVP Nasdaq Emerging Cloud Index (EMCLOUD), which has been trending upward and has already surpassed pre-pandemic levels—though it remains well below its 2021 peaks. This fact indicates substantial room for further growth. Created by Bessemer Venture Partners (BVP), the index tracks performance of newly public companies primarily offering cloud-based software. Given BVP’s early and extensive investments in cloud and SaaS companies—and its status as one of the largest investors in the sector—the EMCLOUD index has quickly become a de facto benchmark for the venture-backed tech industry. Its sustained uptrend typically encourages late-stage startups to go public.
The IPOX 100 U.S. Index is another practical gauge, measuring the performance of the 100 largest recent public companies, primarily those that went public via IPOs or spin-offs. Historically, this index has captured approximately 85% of total market capitalization created through IPOs and corporate spin-offs. Year-to-date, the index has outperformed S&P 500 by nearly 2x, attracting both investors and potential issuers with its strong returns.
5. Risks and Challenges
Despite the prevailing optimism, the anticipated surge in IPO activity in 2026 could be tempered by three key risks:
Geopolitical tensions: Any escalation in U.S.–China trade friction could once again disrupt global supply chains, thereby delaying public listings for a number of companies.
Aftermath of the 2020–2021 IPO boom: Many companies that went public during that period subsequently experienced significant valuation declines and continue to trade below their IPO prices, fueling investor skepticism.
Market volatility: A sudden spike in inflation or an unexpected policy pivot by the Fed could trigger a broad risk-off mode in financial markets.
6. Conclusions and 2026 Outlook
A confluence of macroeconomic, political, and market factors is creating a favorable environment for a gradual yet sustained recovery in IPO activity in 2026. Growth is evident both in the traditional IPO segment and in the SPAC market. However, as long as interest rates remain relatively elevated, the rebound is likely to proceed at a measured pace.
A significant acceleration in IPO activity is expected only after a substantial round of rate cuts and the consequent rotation of capital out of fixed-income instruments in search of higher yields. President Donald Trump’s recent statements on the Fed policy rate below 1% have further heightened investor expectations.
Nonetheless, the aforementioned risks remain relevant and warrant close monitoring. Overall, 2026 has the potential to mark a pivotal turning point in the revival of the IPO market following a multi-year stagnation.
Anton Alikov,
CEO and Founder
Arctic Ventures
https://arcticventures.vc
