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No 'decacorn' founded after 2007 has gone public. Nearly half of the worlds tech unicorns today are private. Those unicorns that have gone public, have fared poorly.
According to a McKinsey study, the reason behind this is that it is simply easier to stay private. The JOBS Act enables businesses to have more shareholders before going public and ample private capital (see Uber's $3.5b raise last week) means going public isn't financially necessary.
This has implications for investors, particularly those investing at later stages, or those reaching the end of their fixed lives.
These dynamics have several implications for investors and entrepreneurs. Inflated private valuations mean that venture investors, especially those involved in later-round funding, can no longer count on IPOs to make money. Seed and Series A and B investors will be largely unaffected: they invest early enough to see a positive return so long as an IPO locks in a higher valuation than the prices they paid in the early rounds. Nonetheless, the longer time line to going public does affect early investors. Eleven years is quite a while for limited partners (LPs) to realize returns, especially when many venture firms try to raise new funds every two to four years. So private-market activity has ticked up significantly as employees and investors alike seek liquidity. Alongside private markets, the M&A route may become an increasingly favorable alternative for such investors.
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