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 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.

Top-tier private companies like Stripe and Databricks are actively choosing to delay IPOs, viewing the public market as an inferior "product." With access to cheaper private capital and freedom from quarterly scrutiny and activist investors, staying private offers a better environment to build long-term value.

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.

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.

The abundance of private capital means the most successful companies no longer need to go public for growth funding. This disrupts the traditional VC model, where IPOs are a primary exit path, forcing firms to re-evaluate how and when they achieve liquidity for their limited partners, even for their best assets.

The trend of companies staying private longer and raising huge late-stage rounds isn't just about VC exuberance. It's a direct consequence of a series of regulations (like Sarbanes-Oxley) that made going public extremely costly and onerous. As a result, the private capital markets evolved to fill the gap, fundamentally changing venture capital.