Stripe is 14 years old and valued at $65 billion. It processes over $1 trillion annually. It hired an IPO-ready CFO. And yet, still no IPO.
The same story plays out at Databricks ($100B+ valuation) and OpenAI ($300B valuation). These aren’t small companies struggling to get their financials in order. They’re industry leaders with massive revenue choosing to stay private.
211 companies are valued at $5 billion or more while remaining private. These “ultra-unicorns” represent $3.5 trillion in private market value.
The reason comes down to maths. Public SaaS companies trade at around 6x revenue in 2025, down from 20-25x in 2021. This recovery narrative vs reality gap explains why private markets let companies control valuations and offer liquidity through tender offers and secondary markets.
Companies are staying private 12+ years now versus the historical 7-year timeline. The question isn’t if they can go public. It’s whether going public makes sense when you can raise billions privately.
What Are Ultra-Unicorns and Why Are They Growing Faster Than Traditional Startups?
Ultra-unicorns are private companies valued at $5 billion or more. There are 211 of them as of June 2025. They represent only 13% of unicorns by count but hold over 50% of total unicorn value at $3.5 trillion.
The US leads with 101 ultra-unicorns. China has 36, India has 19, and the UK has 11. OpenAI raised $40 billion from SoftBank, the largest funding round ever. Meta followed with a $14.3 billion investment in Scale AI.
You don’t need to go public to raise billions anymore. Private tech companies valued above $1 billion now represent approximately $4.7 trillion in aggregate value. The infrastructure for staying private has matured—and it’s good infrastructure.
How Do Public and Private Valuations Differ for Billion-Dollar Companies?
Public SaaS companies trade at around 6-7x revenue as of 2025. That’s down from the 20-25x peak in 2021 during the zero interest rate policy era.
What happened? The Federal Reserve ended ZIRP and raised rates. Higher interest rates reduce the present value of future cash flows. That hits unprofitable growth companies hardest.
Private markets didn’t experience the same compression. AI companies are commanding 25-30x revenue multiples versus traditional SaaS at 6x publicly. That’s a massive gap.
Private companies choose when to raise and who to raise from. They negotiate with a small group of sophisticated investors rather than facing thousands of public market participants who might decide your stock is overvalued on a random Tuesday.
There’s also a disclosure gap. 409A valuations for employee stock options typically come in lower than investor funding round valuations. Employees get options priced at the 409A fair market value while investors buy preferred shares at a premium. Two different numbers for the same company at the same time.
The Rule of 40 states that revenue growth percentage plus profit margin percentage should exceed 40%. Companies scoring above 40 attract premium valuations in private markets. It’s a simple heuristic that actually works.
Why Did Companies Like Stripe and Databricks Choose to Stay Private?
In March 2023, Stripe raised $6.5 billion to provide liquidity to employees. In February 2024, it offered a tender offer at the $65 billion valuation. The company has provided multiple liquidity events for employees without ever going public.
Databricks achieved a $100 billion+ valuation privately. Figma ran multiple tender offers. These aren’t companies that can’t go public. They’ve decided public markets don’t offer enough benefit to justify the costs.
Staying private means avoiding public market repricing. The compression data shows how public companies face immediate markdown. It means maintaining competitive confidentiality instead of disclosing detailed financials quarterly. It means skipping Sarbanes-Oxley compliance and all the fun that entails.
65% of companies disclosed material weaknesses at IPO in 2024, up 15% from prior years. Getting ready for an IPO is expensive and time-consuming.
Private credit, venture debt, and late-stage VC can provide billions without equity dilution. When weighing exit strategy alternatives, staying private offers control that other paths don’t. Why go public if you don’t need the money?
Praveer Melwani, CFO at Figma, explained: “We didn’t need to do a raise to add primary capital. However, we did want to build relationships with our long-term investors and partners by increasing their ownership stake in a non-dilutive way.”
Employee liquidity used to require an IPO. Now it requires running a tender offer. Morgan Stanley at Work has executed over 290 issuer-led liquidity events worth over $22 billion. That’s a lot of liquidity happening without a single S-1 filing.
What Happened to the IPO Market and When Will It Recover?
The IPO market collapsed in 2022 when the Federal Reserve ended ZIRP. 2022 saw 0 software and AI IPOs, 2023 saw only 1, compared to 46 in 2021.
2024 brought 4 IPOs. 2025 has seen 8 so far. But companies are still getting marked down immediately after IPO. The valuations they can achieve publicly don’t match what they can negotiate privately.
Companies are waiting for sustained public market performance before committing. They want proof that valuations have stabilised and won’t crater the moment they ring the opening bell.
How Do Secondary Markets and Tender Offers Provide Liquidity Without an IPO?
Tender offers are company-organised events where the company or new investors purchase shares from existing shareholders at a predetermined price. 75% average subscription rate and 50% participation rate in 2024.
Companies typically allow employees to sell 20-30% of vested equity in tender offers. This provides liquidity while retaining alignment through continued ownership. You get some cash out but you’re still invested in the company’s success.
Secondary markets operate differently. Platforms like EquityZen, Forge Global, Nasdaq Private Market, and Hiive enable peer-to-peer share trading. But here’s the catch: 82% of companies restrict secondary sales entirely, requiring company approval.
The approval requirement matters for cap table management. Private companies maintain control over who owns shares and can prevent unwanted shareholders from showing up on the register.
Minimum transaction sizes typically start at $100,000. Sellers should expect to receive approximately 80% of preferred share prices because common shares trade at a discount.
These employee liquidity solutions have transformed the comparison from “wait years for an IPO” versus “have no liquidity”. Now it’s “wait years for an IPO” versus “sell 20-30% in a tender offer at a known price” versus “find a buyer on secondary markets at a discount”. More options means less pressure to go public.
What Are the Risks of Staying Private Too Long?
Bill Gurley coined the term “zombie unicorns” for companies “alive on paper but unable to produce real returns” due to overleveraged preference stacks. An estimated $3 trillion is tied up in zombie unicorns.
Here’s how it happens. A company raises at $5 billion, then $10 billion, then $15 billion. Each round adds preferred equity with liquidation priority. If the company exits at $12 billion, common shareholders—including employees—get nothing. The preference stack eats the entire exit.
Klarna experienced a down round from $45.5 billion in 2021 to $6.7 billion in 2022, an 86% cut. Employees who joined at the peak saw their equity decimated. Options that looked like life-changing money became worthless.
This creates a competitive talent disadvantage. Employees perceive equity as worthless compared to liquid public company RSUs. Why join a unicorn when you can join a public company and sell stock every quarter?
Companies that manage cap tables carefully and price rounds realistically can stay private indefinitely. Companies that chase valuation headlines end up as zombie unicorns.
Why Do Investors Continue Funding Companies That Delay IPOs?
SoftBank led a $40 billion funding round to OpenAI, the largest ever. Meta invested $14.3 billion in Scale AI. Investors are finding better returns in private markets than public ones.
AI companies command 25-30x revenue multiples in private markets versus 6x for traditional SaaS publicly. Secondary market liquidity allows partial exits before IPO. You don’t have to wait for the IPO to get some money back.
Understanding investor behaviour patterns explains why private valuations exceed what public markets would support. Accredited investor requirements limit retail participation. Access requires income over $200K per year or net worth over $1M excluding primary residence. The everyday investor is locked out.
Investors are willing to pay those valuations for exposure to transformative technology. They’re betting that today’s $100 billion private company becomes tomorrow’s trillion-dollar public company.
How Do US, European, and Asian IPO Markets Differ?
The US leads with 101 ultra-unicorns. China has 36. India has 19. The UK has 11.
US public markets provide far greater depth and trading volume than European or Asian markets. Europe recorded a 20% decline in IPO count to 105 deals. This pushes European companies to consider US listings for better liquidity and valuations.
The US has robust secondary market platforms in EquityZen, Forge Global, and Nasdaq Private Market. European and Asian alternatives exist but with less liquidity and fewer participants.
US companies have the most developed infrastructure for staying private through robust secondary markets and large late-stage funding rounds. If you’re going to delay an IPO, the US is the best place to do it.
The comprehensive market state analysis shows how structural factors continue to favour extended private status across all markets.
FAQ Section
What is the difference between a unicorn and an ultra-unicorn?
Unicorns are private companies valued at $1 billion or more, with 1,596 globally. Ultra-unicorns are the subset valued at $5 billion or more, with 211 companies. While ultra-unicorns represent only 13% of unicorns by count, they hold over 50% of total unicorn value at $3.5 trillion of the total $6 trillion.
Can regular investors buy shares in companies like Stripe or OpenAI?
Not easily. Access requires accredited investor status: income over $200K per year or net worth over $1M excluding primary residence. Platforms like EquityZen, Forge Global, and Nasdaq Private Market facilitate secondary market trading, but minimum investments typically start at $10,000-$100,000 and shares are illiquid compared to public stocks.
How long can a company stay private before employees lose patience?
Average time to IPO extended from 7 years historically to 12+ years currently. Companies mitigate frustration through tender offers allowing 20-30% vested equity sales. Stripe has conducted multiple tender offers over its 14-year private lifespan. As long as employees can get some liquidity, they’ll stick around.
What is a tender offer and who can participate?
A tender offer is a company-organised liquidity event where the company or new investors purchase shares from existing shareholders at a predetermined price. Eligibility is typically limited to current employees with vested equity. Companies usually allow selling 20-30% of vested shares to maintain alignment while providing liquidity. You get cash now, but you stay invested in the outcome.
Why did the IPO market shut down in 2022-2023?
The Federal Reserve ended ZIRP and raised rates to combat inflation. Higher rates reduced the present value of future cash flows, disproportionately harming unprofitable growth companies. Public SaaS valuations compressed from 20-25x revenue in 2021 to 6x revenue in 2025. That’s a 70%+ valuation haircut for some companies.
What happened to companies that were supposed to IPO in 2024?
Many delayed listings awaiting better market conditions. Navan IPO’d in October 2025 at a 10x revenue multiple, then immediately marked down 20%. Not a great advertisement for going public. Klarna filed confidentially for IPO after a down round from $45.5B to $6.7B. Companies saw these outcomes and decided to wait.
How are private companies valued without public trading?
Primary mechanisms include priced funding rounds where new investors set valuation, secondary market transactions providing price discovery, tender offer prices reflecting company and investor negotiations, and 409A valuations for employee stock options that typically come in lower than investor prices. It’s less precise than public markets but more controllable.
What is the Rule of 40 and why does it matter?
Rule of 40 states that revenue growth percentage plus profit margin percentage should exceed 40%. Example: 30% revenue growth plus 15% profit margin equals 45, which passes. Companies scoring 40+ attract premium valuations in private markets. It distinguishes high-quality businesses from unprofitable growth stories that might never turn a profit.
Are we in a permanent shift away from IPOs or is this temporary?
Structural factors favour extended private status: mature private capital markets, secondary market liquidity, reduced public market valuations, and high compliance costs. However, eventual liquidity needs for early investors could restart IPO activity once valuations stabilise. The Federal Reserve’s 50bp rate cut in September 2024 may improve conditions but the valuation gap persists. We’ll see.
What are zombie unicorns?
Term coined by Bill Gurley for companies “alive on paper but unable to produce real returns for shareholders” due to overleveraged preference stacks. Multiple funding rounds at increasing valuations create layers of preferred equity with liquidation priority ahead of common shareholders. An estimated $3 trillion is trapped in zombie unicorns. They look valuable on paper but won’t return money to anyone except the last round’s investors.
Why are AI companies like OpenAI staying private with $300B valuations?
AI companies command 25-30x revenue multiples in private markets versus 6x for traditional SaaS publicly. Staying private avoids regulatory scrutiny, maintains competitive secrecy around model development, and allows rapid pivoting without quarterly earnings pressure. Investors accept long private timelines for exposure to transformative technology. When you’re building AGI, quarterly earnings calls seem a bit beside the point.
How does employee equity work if a company never goes public?
Without IPO, employees rely on tender offers to sell 20-30% of vested equity periodically, secondary market sales if company approves, acquisition exit, or holding illiquid shares hoping for eventual IPO. The risk? Overleveraged preference stacks mean common shareholders get nothing in mediocre exit even if the company is nominally valued highly. Your options could be worth millions on paper and zero in reality.
