What happened to the great American IPO dream?

There is a dark but funny one-act play called No Exit by Jean-Paul Sartre, that gloomy, chainsmoking, wall-eyed French existentialist. The play is about three characters trapped in a room from which they cannot escape. No flames, no pitchforks, no brimstone – it turns out the afterlife isn’t the fourth circle of Hell, but a dinner party you can’t leave.

Round and round these characters go, each demanding what the others won’t give. In the end, the worst punishment isn’t torture. It’s just being stuck. “Hell,” goes the famous line, “is other people.”

Well, mon Dieu, we now have a sequel. For venture capitalists, start-up employees and other investors trapped on the Initial Public Offering-starved trading floor, the past three dry years on Wall Street have swapped existentialist comedy for financial purgatory. Hell is a private market no start-up can leave. In No Exits, our dour bureaucratic parody, private companies have no access to public markets, and investors have no liquidity. IPOs are dead, companies can’t be acquired and the market is no longer a place of creation but a hospice, where dreams go to die.

What happened to the great American IPO dream? Why, just four years ago, for one intoxicating year, Wall Street was a neon-lit party. It was the Roaring Twenties rebooted, fueled by zero-percent interest rates, stimmy checks and a Fed printing press running hotter than a radiator.

No one on today’s trading floor would believe it was possible: a gaudy parade of start-ups, SPACs and tech unicorns – 1,035 of them, an all-time record – galloping to the NYSE and NASDAQ, all for their IPO ball, together hauling in $142 billion like pirates looting silver from Potosí.

But then – pop! – inflation roared, the Fed hiked rates and the carnival went dark. By 2022, the IPO count cratered to 181, with a measly $46 billion in loot. The next year was bleaker still: 154 IPOs, scraping together just $26 billion – pocket change for a nation that had been hooked on trillion-dollar stimulus binges.

Granted, last year the number of IPOs limped back up to 225, but for the few companies that did go public, the results have been grim. According to the Wall Street Journal, as of March the average return since going public for venture-backed IPOs that took place last year was negative 16 percent. Those are numbers that will frost any CEO’s heart.

Since 2022, the Fed’s high-interest-rate regime has greatly discounted the value of future cash flows, which has in turn crushed the stock prices of any tech company still in a growth phase. Valuations have plummeted, leaving investors clutching worthless ticker symbols. That chilling effect has frightened away virtually any company that had previously been tempted to test the IPO waters, lest their public market valuation sink well below what they achieved at the last private round of financing.

The market is no longer a place of creation but a hospice, where dreams go to die

And after all, if you’re a member of the elect, why even go public at all? Hot private companies can sit patiently in the wings waiting for the next euphoric swing. There is simply no need to go public when you can raise billions from a SoftBank or a Sequoia without a single 10-K filing.

As a bonus, founders and early employees can take some of their winnings off the table early, pocketing millions in secondary sales. Instead of sharing the gains, darlings such as Stripe can keep warm in their private fortresses, the new aristocrats, rich on secondaries, untouchable by market swings or shareholder gripes.

The IPO, once a birth, a scream into existence, is now a relic, like true love or God: something investors, French intellectuals and CEOs speak of but no longer truly believe in. We are in a dark comedy, after all. No Exits is a drama no investor can enjoy and it’s presenting an existential challenge to the engine of American dynamism.

To its credit, the Trump administration appears to be less hostile to mergers and acquisitions. In contrast, the Biden administration practically banned them thanks to Lina Khan’s anti-trust crusade at the Federal Trade Commission.

But Donald Trump’s tariff tantrums have sent markets into freefall. The IPO pipeline has 78 filings waiting. Discord, StubHub, Figma, Databricks, Chime, Anduril and possibly SpaceX are all on analysts’ shortlists for potential IPOs this year. But they will have to wait, spooked by the ghost of market volatility and “Liberation Day” nosedives.

It must be said that, regardless of who is in power or what the Fed does, the road to IPO has long been winding. From the day of its founding on April 1, 1976, it took Apple four and a half years to go public. Reports suggest it takes between eight and ten years on average. But this is not a free market. It is one warped by bouts of cheap money and red tape. Filing for an IPO means hiring an army of lawyers, accountants, diversity consultants and PhDs in bureaucratic whispering. Sarbanes-Oxley, Dodd-Frank, DEI mandates, CFIUS – these are not laws but symptoms, cancers metastasizing through the body of what used to be a free market.

The Fed’s zero-interest-rate voodoo had everyone hallucinating wealth. We don’t have to go back there. But without a regular cycle of distributions from exits, investors have been stretched thin. Something eventually has to give. If the US doesn’t find a way to shorten the road to IPO, or if acquisitions don’t pick up, innovation will grind to a halt.

Then we will actually be Europe, a once-great place dragged down into the bureaucratic mire of a dim twilight. Today, the US boasts 612 billion-dollar companies while Europe struggles with 132, its start-up scene a sad collection of companies cowering under the edicts of regulators and grinning tax collectors. No EU company established in the last 50 years has a valuation over €100 billion. All six US companies valued above $1 trillion were founded in that time.

Without IPOs and acquisitions to fuel the next Apple or Tesla, America’s entrepreneurial fire will dim, growth will become a memory and the future will fade into a long, slow coffee break, where existentialist intellectuals contemplate the silence of a continent that has nothing left to say. But unlike Sartre’s cosmic joke, we can choose to exit.

This article was originally published in The Spectator’s June 2025 World edition.