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After the strongest IPO year since 2021, the US market entered 2026 with momentum. First quarter activity shows that the window remains open, with large offerings across industrials, healthcare, technology, and consumer sectors pricing successfully.
Through March 31, 22 traditional IPOs have raised over $9.4 billion, marking the strongest first quarter in the past five years. Notable issuers included a power-equipment manufacturer serving data centers, an equipment-rental platform, a diabetes device carve-out and several healthcare and technology companies. While issuance levels have been encouraging, aftermarket performance has been mixed due to investors being selective about pricing and company quality.
Sector breadth was impressive, with IPOs in industrials, healthcare, consumer, fintech, crypto, and aerospace-related businesses. Several offerings priced at meaningful scale and traded well in the aftermarket. At the same time, some prospective issuers have downsized, postponed, or withdrawn transactions as equity market volatility increased due to AI’s impact on software as a service (SaaS) company valuations.
Software remains a key focus for investors, where they are reassessing growth prospects and competitive moats. Demand is strongest for large platforms with durable recurring revenue, clear differentiation, and a credible path to sustained profitability. Companies with higher growth rates but longer timelines to profitability face greater scrutiny, particularly where valuation depends more on long-term projections than near-term operating performance.
AI continues to drive investor attention, though demand is becoming more selective. Infrastructure, compute, automation, and monetizable AI-enabled platforms are receiving stronger support than more speculative application-layer businesses. As the competitive landscape evolves, investors are placing greater emphasis on revenue predictability and defensible market positions.
Looking ahead, several highly anticipated, large-scale technology issuers are widely expected to consider public offerings in 2026 – some of these could potentially be amongst the largest IPOs in US history. While timing remains dependent on market conditions, such offerings could represent a meaningful share of annual issuance and may serve as important catalysts for broader IPO market activity.
The macroeconomic backdrop remains supportive despite some notable challenges. While headline GDP slowed in Q4, underlying private-sector demand remained solid, supported by business investment and consumer spending. Following 75 basis points of rate cuts late last year, the Federal Reserve has shifted to a more patient stance as it assesses incoming economic data. At the same time, geopolitical developments affecting Middle East energy flows have caused fuel prices to rise while adding uncertainty around inflation expectations. Still, growth is expected to improve modestly in 2026, providing a constructive backdrop for IPO activity.
We continue to view the IPO market as open for companies with the right fundamentals, including appropriate scale, durable growth, a credible path to profitability, and the operational maturity to function as a public company from Day One. Even so, current conditions reinforce that windows can open and close quickly. Companies that are ready, flexible, and disciplined on valuation will be best positioned to execute.
Q1-26 IPO activity marks best opening quarter since 2021
Through the first quarter, 22 traditional IPOs raised over $9.4 billion, compared to 15 IPOs raising approximately $7.9 billion during the same period in 2025. On average, 2026 IPOs are outperforming the broader market, trading down approximately 1% versus a roughly 5% decline in the S&P 500 as of March 31.
This quarter’s largest IPO was a manufacturer of electrical distribution equipment serving data centers and industrial markets. It has traded up more than 8% since pricing, supported by investor appetite for AI-related infrastructure. There were other notable offerings as well. A Japan-based digital payments and wallet platform, which represented one of the largest US listings by a Japanese issuer in years, drew broad institutional participation despite market volatility and is now up more than 33%. And a construction equipment rental and tech-enabled fleet management company rose approximately 32% on its first day of trading, reflecting strong institutional demand for scaled, asset-backed operating models.
Pharma and life sciences (PLS) issuers have driven a notable share of activity, accounting for 7 of the 22 traditional IPOs. Notably, six of these transactions were biotech issuers, a sharp increase relative to 2025, when only seven biotech IPOs priced during the full year. This resurgence suggests improved risk tolerance within segments of the healthcare market, even as broader issuance remains selective.
SPAC IPO issuance has continued to accelerate, reaching its highest level since 2021 with 62 SPAC IPOs raising over $11.8 billion. This compares to 20 SPAC IPOs raising approximately $3 billion during the same period in 2025, representing a near fourfold increase in proceeds. However, de-SPAC activity remains muted, with only nine transactions completed year to date compared to 10 during the same period in 2025. Recent SPAC formations also reflect a more disciplined environment than the prior cycle, with greater emphasis on sponsor experience, sector focus, and investor-aligned deal economics, including performance-based structures and committed financing arrangements.
VC confidence holds thanks to AI—potentially masking structural pressures
Through March 31, venture capital (VC) deal value has reached $267 billion, up from $75 billion the prior quarter. At first glance, that almost fourfold increase signals a sharp market acceleration. That surge, however, was largely driven by a small handful of outsized AI transactions, with approximately $140 billion of total value stemming from just two deals. While the broader VC market continues to trend upward, activity appears increasingly concentrated. The central question is whether this top-heavy momentum can expand beyond mega-deals and translate into a more broadly distributed recovery.
- Liquidity meaningfully improved in 2025 as a handful of IPOs achieved much needed exits. But only 17 unicorns went public, leaving $4.3 trillion of value locked in private markets. With the market now in the fourth year of negative cash flow to limited partners (LPs), the pressure to exit and return money is mounting.
- A potential positive signal for continued VC exits: Recent IPO down rounds suggest companies may be increasingly willing to go public at valuations below prior private-market peaks. For example, one company that reached a $2.7 billion valuation in 2021 ultimately IPO’d at less than half that level.
- Several of the venture market’s most highly valued startups are preparing for public listings, marking a clear shift from the prolonged post-pandemic exit slowdown. However, the scale of these companies—and their elevated private valuations—raises questions about whether there will be enough investor demand to support all of them. The performance of this wave of offerings will determine whether the VC exit window stays open.
- Secondary markets are gaining momentum as liquidity pressures persist across the VC ecosystem. An increasing share of recently funded companies are trading privately—often at discounts to peak-era valuations—while a renewed increase in unicorn valuations is adding to the backlog of VC investors seeking exits.
- Q1 2026 saw 11 VC rounds exceeding $1 billion, up from eight in the prior quarter. Several financings reached unprecedented scale—including raises of $110 billion and $30 billion—marking the largest and third largest rounds on record. These mega-deals remain heavily concentrated in AI, with the vast majority of $1 billion-plus rounds tied to AI-related companies. At the same time, activity is beginning to broaden. Smaller and earlier-stage financings are showing signs of recovery, with Series A deal value reaching $14.2 billion, up from $10.6 billion in the prior quarter.
- VC fundraising and exit activity remain highly sensitive to macroeconomic conditions. Q1's $47.8 billion headline figure masks underlying weakness — the two largest funds accounted for more than half of capital raised, suggesting broad LP appetite remains constrained. Signs of labor market deterioration and rising volatility could further pressure capital formation.
- AI continues to dominate venture deal activity and is offsetting broader signs of market volatility. The more pronounced impacts of volatility are visible in liquidity and fundraising dynamics, as an evolving exit backdrop and risk sensitivity drive capital toward larger, more established managers.
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