VC-Backed Firms Choose Mergers and Buyouts Amid Uncertainty Around IPOs

Companies backed by venture capital (VC) firms are reportedly choosing mergers, acquisitions and buyouts over initial public offerings (IPOs).

While the overall number of exits remained flat in the second quarter compared to the first, the majority came from mergers, acquisitions and buyouts, Bloomberg reported Tuesday (July 8), citing data from Pitchbook.

The report attributed the decline in the number of IPOs to venture capital firms’ uncertainty around the state of the public market, trade policy and the economy in the United States.

“A recent pickup in the IPO activity in [the] current environment looks more like a reset rather than a full recovery,” said Emily Zheng, VC analyst at Pitchbook, per the report.

During the first half of the year, 27 VC-backed companies went public, the smallest in at least a decade, according to the report.

However, companies in some sectors are looking to go public, the report said.

“The biggest trend in going public throughout 2025 and likely during the entire [President Donald] Trump term will likely be across companies that are exposed to artificial intelligence, national security, defense and crypto,” Zheng said, per the report.

The report noted that three companies that participate in those sectors — Circle Internet Group, CoreWeave and Voyager Technologies — have outperformed since their IPOs.

It was reported in June that private equity (PE) firms were rethinking their exit strategies as the IPO drought persisted.

At that time, the volume of PE-backed IPOs in Europe and the U.S. had fallen to nine, down from 116 during the same period in 2021, which was the heyday for those IPOs.

PE executives were prioritizing other methods for exiting their investments, including breaking up businesses to sell them off in smaller pieces or selling companies to themselves through “continuation funds.”

That report attributed the change to higher interest rates and market turmoil that made it tougher to take companies public or sell at acceptable prices.

In April, it was reported that with public listings on hold, venture capitalists were turning to the secondary market. That market, which is a venue for buying or selling shares in private companies, has boomed in recent years.

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