IPOs: Darwin on Steroids

Recently, PitchBook reported that "15.9% of venture-backed deals (Initial Public Offerings or IPOs) in 2025 have been “down rounds” (i.e. is when the company’s public offering price than the private valuation). This statistic is the highest in a decade.

Moreover, almost every major IPO listing in Q2/205 has hit the public markets below its peak valuation."

Not very pretty.

Let me first acknowledge, IPOs in the U.S. are exceedingly rare.

Out of millions of active businesses, less than .1 percent list on a public exchange. Yes, you read that correctly. Less than .1 percent.

Even angel and venture capital backed startups don't make the cut. Estimates suggest only 1-2% exit via an IPO. Most exit through acquisition, stay private, or fail (most fail by the way). Specifically, out of 6 million active U.S. firms, only 150-300 go forward with IPOs annually.

IPOs are not the norm. Far from it.

Yet, IPOs are beloved by the business press and are the fantasy of startup founders and early-stage investors. They offer access to badly needed capital and provide an exit for the early investors, but they carry considerable risk for both companies and investors.

For issuing companies, dangers include market volatility, loss of control, high compliance costs, and incredible scrutiny by the SEC with no secrets allowed.

For investors, IPOs can be over-hyped (almost always), priced too high, volatile, and can under-perform expectations from the opening bell.

Both parties face uncertain markets and volatile valuations. This makes the initial timing, pricing, and overall fit with the public markets critical to success.

Source: Fortune Magazine and Investopedia

John Bradley "JJ" Jackson

© 2025, John Bradley Jackson, All Rights Reserved