Silicon Valley’s top start-ups opt to stay private, delaying IPO plans in 2025

The largest start-ups in Silicon Valley are choosing to stay private longer, disappointing investors eager for public listings to cash out their holdings. These companies have tapped into vast pools of private capital, allowing them to resolve two key issues that typically push businesses to go public: the need for growth funding and employee liquidity.

Recent fundraising rounds underscore this trend. Databricks raised $10 billion in December 2024, marking the largest venture capital round of the year. This followed SpaceX’s $1.25 billion raise in November, making it the world’s most valuable private start-up, and OpenAI’s $6.6 billion haul in October. Databricks CEO Ali Ghodsi told the Financial Times, “We are operating as a public company already,” suggesting the company is in no rush to list.

Private Markets Redefine Growth

A new wave of start-ups, far larger than many public companies, is capitalizing on the growth of private markets. According to Forge Global, the seven largest private companies in the U.S. are valued at $695 billion, with SpaceX and OpenAI alone accounting for more than $500 billion of this total.

Kelly Rodriques, CEO of Forge Global, noted that the biggest tech start-ups “have so much access to capital at so much scale there isn’t an incentive driving them to go public.” Large venture funds, including Thrive Capital and Lead Edge Capital, have been instrumental in this shift. Thrive has invested over $1 billion each in Databricks, Stripe, and OpenAI in the past two years, highlighting the enormous scale of private funding today.

Mitchell Green of Lead Edge Capital observed that for the largest 15 to 20 start-ups, including Databricks and Stripe, “it’s as if they’ve already had their IPOs privately.” These companies have found ways to scale and provide liquidity to employees, addressing key challenges without the need to face public market scrutiny.

Avoiding Public Market Pressures

Remaining private allows start-ups to avoid the rigors of public market oversight. Quarterly earnings pressures and the threat of activist investors can hinder long-term strategies. Luke Ward, an investment manager at Baillie Gifford and an investor in SpaceX, argued, “Some of these pioneering companies wouldn’t have been able to do what they have done if they had been on public markets and had those short-term pressures.”

However, critics warn that private valuations can become disconnected from reality. WeWork’s infamous $47 billion valuation—driven by private funding—collapsed during its attempted IPO, exposing flaws in its business model. One U.S. foundation investment head described private markets as operating in a “parallel universe,” with valuations and liquidity driven by internal dynamics rather than external scrutiny.

The Exceptions to the Rule

While many of Silicon Valley’s biggest names are steering clear of public markets, some companies are opting to go public under unique circumstances. ServiceTitan, a software company, floated on the Nasdaq in December 2024 to meet the terms of a 2022 funding agreement with private equity firm TPG, which included a “compounding IPO ratchet” that effectively forced the company to list.

Similarly, looming stock option vesting deadlines pushed companies like Instacart, Klaviyo, and Rubrik to go public in recent years. Despite being driven by necessity, these IPOs have performed well, with share prices rising significantly post-listing.

Looking Ahead

For now, the largest start-ups in Silicon Valley show little urgency to go public. Analysts expect smaller companies to test the IPO waters first in 2025, leaving giants like Databricks and Stripe to remain private.

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Source of the Article: Financial Times