Why Most IPOs Just Aren’t Worth It
A public debut used to be the holy grail of American enterprise—the moment when visionaries, having built something remarkable, opened their doors for the rest of us to own a slice of the dream. Lately, however, the Initial Public Offering feels more like a last-ditch effort to offload a stalled story on unsuspecting buyers. As the aptly titled “IPOs Are Terrible Investments” piece points out, early investors and insiders already harvest the prime gains well before the market ever sees a ticker symbol flash at the opening bell.
The numbers over the past two years speak volumes. In 2024, according to Renaissance Capital, IPO proceeds stumbled to just $25 billion—a dramatic 70% tumble from the heights of the late 2010s. The start of 2025 fared no better, with a mere $7 billion raised in the first quarter by a trickle of companies testing the waters. Sure, some new stocks get a fleeting pop, but don’t mistake that for sustainable growth. By year’s end, more than half of the 2024 listings sank below their opening-day prices, leaving the party early and leaving public investors holding the bag.
So where is the real money being made? Increasingly, in pre-IPO investment alternatives, where family offices, specialty funds, and even forward-thinking individuals strike deals before a company hits the public spotlight. These private-market transactions can offer patient capital, better alignment of interests, and higher upside potential—especially when a promising startup is still in its growth phase. It’s the kind of arrangement that made venture capital so appealing in the first place.
Ironically, many VCs now find themselves squeezed out of the best deals. As big players—think private equity giants and well-heeled family offices—move in with deeper pockets, traditional venture funds can’t always match those competitive term sheets. Companies that might have bolted for the public markets five years ago are opting to stay private longer, leveraging these alternatives for growth rather than subjecting themselves to the unpredictability of an IPO.
The upshot? For average investors hoping to profit from an IPO, the odds of catching that elusive jackpot are smaller than ever. If you’re not in on the pre-IPO stage—whether via direct investments or specialized platforms—you’re probably too late to the party. The data from 2024 and 2025 just confirms that by the time the bell rings on Wall Street, the best feast has already been served.
