Activity across the US venture capital-backed initial public offering (IPO) market should begin to bounce back this year, analysts have forecast.
Some 51 to 61 such IPOs were expected in 2025, PitchBook analysts said in a research note on Friday, lifting the market from a three-year drought where activity has been at its lowest since 2011.
Following a “mere” 40, 41, and 42 floats in 2022, 2023 and 2024 respectively, PitchBook said expected Federal Reserve rate cuts and ongoing US economic strength would help.
“A moderate increase in IPOs could be realized in the second half of the year after the venture market has time to adjust [bringing] much-needed liquidity back,” it said.
According to PitchBook, the US venture capital market had swelled from around US$1.7 trillion in 2020 to US$4 trillion currently as a stockpile of theoretically ready-to-float firms built up.
Challenges have included high valuations, investor demands for clear profitability paths, and a crowded landscape in the likes of the AI, fintech and health sectors, analysts noted.
Proposed tariffs, political tension and wider uncertainty under the new Trump administration also threatened to hamper activity ahead.
“Though hopes are high, the outlook for 2025 remains murky,” PitchBook added.
“Rate cuts have started, which should elevate investor risk appetite for venture-backed growth companies as other strategy yields decrease. However, a shift toward IPOs has yet to begin. Until it does, limited partners will continue to put pressure on funds and startups to generate returns as the market ages.”