As companies stay private longer, employees become multi-millionaires on paper but struggle financially. Providing structured secondary liquidity allows long-tenured employees to realize some wealth, buy homes, and improve their quality of life, which is crucial for retention beyond year seven or eight.

Companies like Stripe are avoiding IPOs because the private markets now solve the two main historical drivers: access to capital and employee liquidity. With annual secondary tenders and vast private funding available, the traditional benefits of going public are no longer compelling for many late-stage startups.

The traditional IPO exit is being replaced by a perpetual secondary market for elite private companies. This new paradigm provides liquidity for investors and employees without the high costs and regulatory burdens of going public. This shift fundamentally alters the venture capital lifecycle, enabling longer private holding periods.

In an era where companies stay private longer, the promise of a distant IPO is not enough. Talented employees now expect and demand opportunities for secondary sales through tender offers. Startups that cannot provide a credible, near-term path to liquidity will lose the recruiting war for top talent.

In the 1980s, companies like Apple went public early as a fundraising necessity, allowing public investors to capture most of the growth. Today, robust private markets mean companies stay private longer, making IPOs primarily a liquidity event for insiders and VCs, with less upside left for the public.

The traditional purpose of an IPO—raising capital for company growth—is obsolete. Today, companies scale using private equity and only go public to allow early investors and insiders to cash out. This means the public market captures significantly less of a company's early, high-growth phase.

iCapital's CEO argues against rushing to an IPO, citing the distraction of stock volatility. To retain employees who hold equity, the private company provides periodic opportunities for them to sell a limited portion of their holdings. This balances the need for liquidity with the benefits of staying private.

Top companies like Stripe or SpaceX can stay private forever by using robust secondary markets to provide liquidity to employees and investors. This allows them to focus on long-term growth without the burdens of public company reporting and quarterly profit pressures.

For many large companies today, an IPO's primary purpose has shifted from raising growth capital—which is readily available in private markets—to creating liquidity for early investors and employees. The public offering acts as a valuation marker and an exit opportunity, not a funding necessity.