The Vanishing Public Market
Since 1996, the number of public companies has precipitously declined. Companies are delisting from exchanges, pushing off IPOs, or never going public at all.
I, like many others, often treat the S&P 500 as if it represents the public markets of the United States. In many ways it does. You can buy cheap exposure to the 500 largest cap stocks in the NASDAQ and NYSE, and historically, this has been a great bet. The largest companies, including Apple, Amazon, Nvidia, Facebook, Tesla, and Microsoft, have generated fantastic returns and trade at multiples worth dozens of their yearly earnings. One might imagine that this is a sign that the public markets are healthy, and that companies would generally want to IPO and get access to public dollars. This is not the case. While market cap has increased in the largest companies, the overall number of companies that choose to be public is half that of what it was in 1996.
Source: World Bank
Source: Visual Capitalist
Why is this happening
First and foremost, being public was not always a choice.
For much of the 20th century, if a company wanted to raise serious capital at scale, it had to go public. There was no robust private capital ecosystem — no SoftBank Vision Fund, no Tiger Global, no trillion-dollar private equity firms with an appetite for owning entire businesses off the grid. The IPO was the gateway to growth, liquidity, and legitimacy.
That’s no longer true.
Over the past two decades, a combination of regulatory changes, capital abundance, and strategic incentives has made it not just feasible, but often preferable, for companies to remain private far longer — or indefinitely.
One key turning point was the Sarbanes-Oxley Act of 2002, passed in the wake of Enron and WorldCom. It imposed stricter auditing, disclosure, and governance requirements on public companies, especially burdensome for smaller firms with limited compliance budgets. As scholars Suraj Srinivasan and John C. Coates found, Sarbanes-Oxley generally increased annual compliance costs for firms, and was especially burdensome for small-cap companies.
At the same time, private capital exploded. As of 2024, private equity and venture capital firms manage over $11 trillion globally. As Bloomberg opinion columnist Matt Levine often puts it, “Private markets are the new public markets,” and it’s easier for companies to raise money from a few giant investors than from thousands of retail shareholders.
The returns haven’t been bad either. While the performance gap between private and public markets is narrowing, according to JP Morgan, institutional investors still perceive private equity as a superior asset class.
Add in the shrinking viability of IPOs as an exit strategy for investors — between volatile markets, underwhelming first-day pops, and regulatory gauntlets — and selling to private equity looks attractive.
Put simply, companies today can stay private longer, they want to, and many now believe they should.
Notable Companies That Are Staying Private
The biggest names in tech and infrastructure aren’t rushing to go public — and their estimated valuations reflect just how much the private market matters.
SpaceX, valued at around $400 billion, continues to lead in space launch and broadband (Starlink), and is still fully private.
Stripe avoided an IPO in favor of a tender offer for employees, reaching a valuation of $91.5 billion.
OpenAI raised $40 billion from SoftBank and others in early 2025, valuing itself at $300 billion.
ByteDance, the parent of TikTok, is valued at around 180 billion.
These aren’t speculative startups. Yet, despite their scale and impact, retail investors can't buy them.
Final Thoughts
For most individual investors, the private market boom is happening behind a closed doors. Access is limited by accreditation rules — to qualify, you need to earn at least $200,000 annually (or $300,000 jointly), or have a net worth over $1 million excluding your primary residence. Even then, high-quality opportunities are rarely accessible. Top-tier venture and private equity funds often have investment minimums of $100,000 or more, and they rarely accept new or unconnected investors.
Platforms like EquityZen, Forge, and Sweater are trying to bridge that gap, offering retail access to shares in private companies. But these come with trade-offs: high fees, illiquidity (you may be locked in for years), and often limited transparency. And there’s a selection problem — many of the best companies never make it to these platforms. If a company can raise 100 million dollars from one limited partner, why would they raise 100 million dollars with 200 retail investors? Additionally, the fees associated with private markets are far higher than what one pays in a low-cost index fund.
Meanwhile, as of today, the top 10 companies in the S&P 500 account for over 38.4% of the index’s total weight. Apple, Microsoft, Amazon, Nvidia, Alphabet, and Meta alone dominate U.S. equity returns. Public markets still represent trillions in value — and offer liquidity, transparency, and access. But they no longer offer the same discovery ground for the next Amazon or Google. Most public market innovation comes in late, after much of the upside has been claimed privately.
The way I see it, some companies should absolutely go private. If a firm is mismanaged or mispriced, then by all means, a private equity firm should buy the company and help it reach its potential. What I find worrying is that non-institutional investors may not have access to the highest quality companies that will be the future of American business.
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