A decade ago, 88% of a tech company's value was created post-IPO. For recent IPOs, 55% of the market cap creation happened while the company was still private, fundamentally changing where investors capture growth.

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 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The traditional purpose of an IPO—raising capital for company growth—is obsolete.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.

The decision to go public is now driven less by a need for currency or liquidity and more by massive capital requirements, like for AI build-outs, that private markets can no longer satisfy. Solomon notes the current regulatory and market structure makes it unattractive for companies to go public until it's an absolute necessity.

With billions in private capital available, companies no longer need to IPO for growth financing, staying private for over a decade. This fundamentally shifts value creation and innovation away from public markets, unlike in the 1990s when firms like Amazon went public to raise small sums.

The number of IPOs remains modest not due to a weak market, but because of two structural shifts. First, vast private equity and VC funding allows companies to stay private longer. Second, tech industry dynamics favor large, dominant players, leading to more acquisitions (trade sales) than IPOs for successful startups.

Due to the abundance of private capital, companies now go public much later in their lifecycle. The IPO has consequently become the final exit for insiders to cash out, leaving little upside for retail investors who are effectively buying at the peak.

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.