Capital markets 2025 midyear outlook: PwC

The US IPO market entered 2025 with renewed optimism following a stronger-than-expected close to 2024. As of May 31, traditional IPOs have raised more than $11.0 billion, slightly behind last year’s pace, signaling a continuation of the market’s tentative recovery.

This year’s activity started off stronger, marking the busiest opening stretch since the bubble year of 2021. But momentum stalled late in the first quarter amid macro headwinds, including persistent inflation, mixed signals on AI-driven valuations and the global market sell-off that occurred in April following shifting US trade and regulatory policy under the new administration.

A few IPOs struggled to price in the first quarter. After the early April tariff announcements, many in-process IPOs immediately paused as market volatility spiked. While the real economy seems to remain somewhat resilient, the Federal Reserve has adopted a wait-and-see approach. At its most recent meeting, the Fed held rates steady and reiterated its data-dependent stance.

By April, investor sentiment had grown cautious amid sharply higher volatility and policy uncertainty – highlighting the fragile nature of the current IPO window. That said, newly public companies have performed relatively well, helping sustain interest in the pipeline. SPAC issuance, on the other hand, is enjoying its most active start since 2022, with over $9.5 billion raised, though de-SPAC activity remains muted.

The time period from mid-May to early June brought a notable rebound in equity market sentiment following a 90-day pause in new tariff announcements. The IPO market responded in kind, with six companies coming to the market and all either achieving pricings above (four companies) or at the high end (two companies) of their ranges. All six opened for trading the next day at prices more than 20% above pricing (with two of the IPOs exceeding 100%).

This group included a broad sampling of company types: a financial technology company, a connected TV advertising company, a digital health platform, a crypto infrastructure provider, a defense/space tech company, and a notable consumer focused neobank. The breadth of industry sectors underscores the improving equity risk appetite in the IPO market. The success of these pricings and subsequent openings suggest the IPO window may have finally widened and investors are ready to put capital to work for companies with strong fundamentals, capital discipline and compelling equity narratives.

“In today’s volatile environment, IPO windows are opening and closing faster than ever. Companies with strong fundamentals and readiness in hand will be better positioned to move when the opportunity strikes – and with a deep pipeline of IPO-worthy businesses, we expect those who are prepared will lead the next wave of offerings.”

Mike Bellin,IPO Services Leader, PwC US

IPOs show early strength in 2025 but face renewed uncertainty

Through the end of May 2025, we’ve seen 25 traditional IPOs raise over $11.0 billion, compared to 28 IPOs raising $12.7 billion over the same period in 2024. IPO activity this year has been led by companies across technology, energy and financial services. This year’s IPOs are outperforming the broader market – up approximately 11% on average versus a 1% gain in the S&P 500 year to date.
Many companies delayed their IPOs this quarter due to uncertainty around the new administration’s trade policies, as well as increased market volatility. However, select issuers are starting to return to the market, testing conditions ahead of what could become a more active second half.
The largest IPO of the year so far came from a liquefied natural gas (LNG) exporter raising $1.8 billion. However, the deal required a valuation reset before pricing, reflecting the market’s cautious stance despite strong demand for energy assets.
Fintech appetite is showing signs of life. A global trading platform – previously expected to go public via a de-SPAC – successfully completed a traditional IPO, pricing above its range and closing up approximately 29% on debut. The deal highlights renewed interest in profitable, well-known fintech businesses with global scale even amid broader market caution.
AI continues to drive IPO interest, though investor interest remains selective. In the first quarter, one highly anticipated AI infrastructure provider reduced its offering size and pricing range and relied on cornerstone investment to complete its deal – but has since surged over 164% post-pricing. The transaction reflects investor demand for differentiated, scale-ready AI platforms, even as execution remains complex.
A high-growth digital health platform became the first in its sector to go public in 2025, debuting in late May and closing up nearly 17% on its first day of trading. With strong growth metrics, improving profitability, and alignment with value-based care models, the deal drew solid institutional demand and is seen as a bellwether for the broader health-tech and digital therapeutics pipeline.
A digital asset infrastructure company completed one of the strongest IPO debuts in recent memory, pricing above its range and closing up around 170% on day one. The deal benefited from growing institutional interest and regulatory tailwinds across the crypto space – momentum that could encourage other well-positioned companies in the sector to pursue public listings in the months ahead.
A leading neobank recently went public, marking one of the most significant digital banking IPOs since the last cycle. The deal priced above range and opened 59% higher on its first day of trading—highlighting renewed investor appetite for fintech platforms with scale, strong brand recognition and improving financial performance. The transaction may serve as a barometer for sentiment toward other consumer fintechs exploring the public markets.
SPAC issuance has seen a sharp resurgence in 2025. So far this year, 53 SPACs have raised over $9.5 billion — compared to just nine SPACs raising $1.2 billion over the same period in 2024. However, de-SPAC activity remains subdued, with only 16 de-SPACs completed year to date versus 36 during the same period last year – underscoring continued execution challenges and tighter investor scrutiny in the de-SPAC market.
The longer-term outlook for IPOs remains promising but is not without risks. A strong and diverse pipeline of companies is preparing to go public once market conditions stabilize. While PwC estimates a 60% likelihood of a soft landing, concerns around slowing growth, elevated inflation and policy uncertainty persist. If macro conditions remain supportive – driven by potential Fed rate cuts, inflation trending toward target and record levels of dry powder – the IPO market could see a more sustained recovery over the medium to long term.

Venture capital in 2025: A market split between AI and everything else

At first glance, 2025 looks like a strong year for venture capital (VC), with headline exit activity reaching multiyear highs. But the underlying data tells a more nuanced story. Nearly 40% of first-quarter exit value came from a single IPO, and 71% of all venture funding is now concentrated in AI and machine learning deals – driving a growing divide between the AI “haves” and the broader VC market.

Valuation expectations remain misaligned but are recalibrating: Outside of AI, a disconnect persists between investor expectations anchored in 2021-era valuations and today’s more cautious, fundamentals-driven environment. Late-stage investors are cautiously stepping back in, driving gradual valuation resets — especially for companies with strong metrics and differentiated market positions.
Founders focus on discipline: Startups are responding by emphasizing operational efficiency, extending their runways and defining clearer paths to profitability.
Macroeconomic and policy headwinds persist: The VC market continues to face multiple challenges – elevated interest rates, weaker exit channels and limited LP distributions – now compounded by trade policy uncertainty and a deteriorating growth outlook.
Time-to-exit continues to stretch: With IPO markets still largely paused, the median time to exit via IPO has extended to 6.1 years – the longest since 2016.
Liquidity outlook improving: While early 2025 brought uncertainty and delays, recent high-profile IPOs have reopened the window for select companies. Strong first-day performance and renewed institutional interest suggest that a broader liquidity cycle may still take shape in the back half of the year—particularly for companies with scale, profitability, and clear sector tailwinds.
Capital concentration intensifies: Investor selectivity is driving a flight to quality, with capital consolidating in fewer, larger rounds. In the first quarter, only 892 early-stage VC deals were recorded – down both quarter-over-quarter and year-over-year – while the median early-stage deal size rose to $7 million, a 27% year-over-year increase. Deals over $50 million now account for 7% of all VC deals, nearly double their share from 2023, as smaller rounds fall to the lowest share in a decade.

_{^{Note: IPOs with deal values of less than $25 million, best efforts offerings, oil and gas royalty trusts, business development companies, pricing on OTC Bulletin Board and OTC Pink Sheets are excluded from this narrative. Data from SEC filings and third-party databases are as of May 31, 2025.}}

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