Startups Seek New Paths to Liquidity Amid Slow IPO Market

In the current economic environment, going public through an initial public offering (IPO) may not be the top priority for all high-growth startups. With challenging market conditions slowing the pace of public listings, some companies are exploring alternative routes to bring liquidity to their shareholders.

For European secondhand fashion marketplace Vinted, a private secondary share sale helped the company reach a $5 billion valuation. The deal allowed existing investors and employees to cash out part of their holdings, providing liquidity without an IPO. Vinted joins other European “scale-ups” tapping this path.

Not all founders see the current private status as only temporary. Ro Healthcare CEO Zachariah Reitano said in a recent interview that while going public is possible someday, the company enjoys benefits of remaining private. As private company perks increase, views on an eventual public offering may change over time for some businesses.

Cybersecurity startup Wiz reportedly aims to hit $1 billion in annual recurring revenue (ARR) by 2025 before assessing a potential stock market debut. Achieving certain financial and operational metrics is setting clear milestones that may precede an IPO. The company had earlier declined a $23 billion acquisition offer from Google.

Several Indian startups are also relocating headquarters back home to better comply with domestic rules and simplify a future local public listing. The geographic shift underscores the importance of addressing local market needs and regulations for companies mulling an IPO in future.

While market challenges remain, new opportunities are emerging too. US regulators enabled electric air taxis and drones to freely use airspace, a boon for startups developing flying vehicles and urban air mobility solutions. Overall, startups continue seeking the right paths for growth and value realization amid dynamic economic conditions.