By Liz Dunshee
After a few years in the deep freeze, the IPO market is heating up – especially for tech companies – but fundamentals and readiness are critical. Earlier this week , Cooley partners Dave Peinsipp and Milson Yu participated in a discussion about current trends, timing, and tech opportunities – and they shared a number of helpful takeaways for companies looking to catch the wave. If you missed the Cooley Market Talks webcast, watch the full replay here.
Recent data points to a healthy rebound
- Year-to-date IPO volume is up compared to last year, with tech leading the charge.
- Overall, US IPO volume is already 20% larger this year than it was for all of 2024.
- The tech sector has raised nearly three times the amount of capital than in all of 2024.
- Pricing trends are favorable. Almost 90% of deals this year priced within or above their ranges.
- Since August, every tech IPO has priced at the midpoint of the range or higher.
- Aftermarket performance is the strongest since 2021 – but there is [some] noise here.
- Some companies are performing very well – others are facing challenges.
- Overall, investors are leaning in.
Several factors are driving the surge
Investor appetite is at multi-year highs, reflected in deeper order books and oversubscription levels that have nearly doubled compared to last year. Additionally, the scarcity value of differentiated tech stories is appealing to fund managers seeking alpha beyond mega-cap names dominating indices.
For private companies, the benefits of going public – brand visibility, liquidity for employees, and access to capital – remain compelling.
Growth stories win
Larger companies with $500M+ annual recurring revenue have dominated recent IPOs, but the window is widening. Companies with $200–250M in revenue are increasingly viable candidates, especially if investors believe the valuation gives them opportunities to participate in future growth. Investors want to understand the company’s vision and roadmap for a durable future.
Explain how AI affects your business
No discussion of tech IPOs is complete without AI. We haven’t necessarily seen pure-play AI listings hit the market yet – but nearly every tech company is weaving AI into its narrative. Investors want clarity: How does AI drive revenue acceleration? Is it a tailwind or a risk?
Companies should avoid “AI washing” – overhyping capabilities without substance – and be prepared to answer questions. Accurate and balanced disclosures will help satisfy both investors and the SEC, and will also help protect the company from future litigation and enforcement actions. SEC comment themes include:
- What does the company mean when it refers to “AI”?
- How do AI solutions integrate into the company’s products?
- How are your AI solutions built – do they use specific LLMs, proprietary data, customer data, third-party data?
- What do your AI solutions do and not do, and how do they tangibly fold into the company’s growth plans?
The SEC is “open for business”
The record-breaking government shutdown threw a wrench into many offering timelines, and the staff is continuing to work through a significant backlog. However, we expect that once the backlog is cleared, the staff’s responsiveness will give more predictability around SEC review periods, which will help issuers plan IPO timelines amid lingering macro uncertainty.
On the regulatory front, the SEC is streamlining reviews and maintaining dialogue with issuers, particularly in tech. Hot-button areas like non-GAAP metrics and MD&A disclosures are still priorities, but the overall tone is “open for business.”
Flexibility and preparation are the new playbook
Think of the IPO process as a marathon, not a sprint. For companies with a compelling narrative, early investor engagement through non-deal roadshows and “testing the waters” meetings is now standard, often starting 12-18 months out. This de-risks the IPO process by providing companies with feedback and visibility into what investors are looking for and an opportunity to build trust. Companies that may be planning an IPO in 18-24 months can also begin developing investor relationships through participating in events as a private company, well before the IPO.
Flexibility and preparation are also key on deal structure. Secondary components in IPOs are more common these days, helping optimize float without unnecessary dilution. Cornerstone investors are also gaining traction, providing additional deal stability. Nimble companies can benefit from both trends – but doing so requires an early review of the cap table, and attention to investor dynamics.
IPO readiness is also key for aftermarket success
IPO readiness goes beyond size and doesn’t depend on any single metric. It also goes beyond the moment of “going public.” The ability to deliver consistent results and establish a “beat and raise” cadence post-IPO is critical to achieving aftermarket liquidity and other benefits of being public.
To get there, financial planning and analysis, accounting, external reporting, and governance functions require time and attention. Here are a few actions to take well before going public:
- Start practicing mock earnings calls and refining forecasting and disclosure discipline.
- Confirm auditor independence.
- Ensure your service providers can support you as a public company.
- Think through board composition, multi-class share structures, and other corporate governance matters discussed in the Post-IPO Governance Trends Report that we recently added to IPO GO.
Be ready for an active 2026 IPO market
Next year could be a blockbuster. Companies that prepare now will be best positioned to catch the wave. That means tightening financial controls, building governance structures, and crafting a clear growth narrative. When the window fully opens, speed will matter. The era of waiting for “perfect timing” is ending – readiness is the new differentiator.
