In recent years, subdued IPO activity has limited the flow of new companies into the public small-cap universe. We believe that the IPO market is beginning to rebound, with 46 US IPOs exceeding $25 million completed so far in 2025, raising a combined total of $24 billion year-to-date. This marks an 18% rise in the number of IPOs compared to the same period last year, setting 2025 on track to be the most active year for IPOs since 2021.7
There has been discussion about companies increasingly choosing to stay private for longer. Last year, we observed a spike in the median age of a company at IPO to 14 years (from 10 in 2023). Some companies go from private markets straight into mid- and large-cap indices as a result. However, this is not unusual in historical terms. In previous cycles, the median age of companies at IPO also reached 14-15 years but then subsided. We note that as of May 2025, the median market value of an IPO at first close was still small-cap at $1.2bn (adjusted for inflation).8
We believe there may be benefits to businesses remaining private for longer, as it gives them time to refine their models and emerge as more mature, yet fast-growing, public companies. Looking ahead, we believe the small-cap universe will continue to be revitalized by high-quality new entrants, many of which have been supported by private equity in their formative years.