Three years after the technology IPO market began declining, the IPO window appeared to be opening in the first few months of 2025. Despite market volatility and policy uncertainty, quality companies were poised to go public amid strong investor demand. However, the White House’s seismic April 2nd “Liberation Day” tariff announcement has, at minimum, delayed the IPO plans of several companies.
As investors sort through the impact of this radically altered trade environment, some of the world’s top technology investors and company leaders gathered for the Jefferies Private Growth Conference on April 22-23 in Santa Monica, CA. Ahead of the conference, we spoke with Evan Osheroff, Jefferies’ Managing Director of Software Investment Banking, to get his take on what’s shaping the technology market and where it’s headed.
Q: The White House tariff announcements caused immense short-term disruption. But do you expect it to fundamentally impact the trajectory of technology industry deal-making this year?
Evan: In addition to causing short-term disruption, it further cemented an environment of volatility, which is even more critical to overlay on the deal environment. As advisors and investors, we can’t control policy. All we can do is react to it. In the first few months of 2025, we already saw a dozen deals featuring venture-backed companies being acquired or going public at billion-dollar-plus valuations. So, the investor interest we expected to have coming into the year was undoubtedly there. I think it will still be there when the smoke clears a bit from the recent market volatility. We have companies in the IPO pipeline that are ready to go imminently and are just taking a week-by-week approach as to when to launch their offering.
In the meantime, investors need to stay focused on company fundamentals and recognize that when it comes to Washington, the only certainty for the next few years is likely to be uncertainty.
Companies, both public and private, venture-backed or in private equity portfolios, will have to accept volatility as the new norm. If people wait for things to calm down and become comfortable, there will be no M&A activity, IPOs, and limited capital returned to LPs. I don’t believe that is how this will play out, and the first few months of 2025 certainly suggest companies and investors are willing to transact despite the volatility.
Q: What is the current state of the IPO market, and what can we expect in the near future?
Evan: We are seeing some positive signs and increased activity, which we expect to continue. Companies are starting to select their underwriters and getting prepared, and interest in IPOs is definitely high. Business health is good, and valuations are more realistic than a few years ago. The problem recently has been a lack of supply. There have been too few IPOs, and people hesitate to be the first mover.
Many good companies are waiting in the background if they have a strong balance sheet. Clearly, some will choose to wait a bit longer as they assess the impact of tariffs and any knock-on effects they have across the market. Nonetheless, you have several notable fintech names ready to go. There are also several large software companies valued in the tens of billions that could go public any time they want, and we expect at least some to start sooner rather than later. Although there has been less activity in enterprise, a broad array of companies across various tech sectors are getting prepared for a potential IPO.
If these companies have a large cash pile and don’t have to do anything, they will not rush out. In the meantime, many companies are doing secondaries to provide liquidity to their employees and investors.
Our advice to companies considering an IPO is to worry less about a macro market window and more about your own window when you are growing fast, making the transition to profitability, and leaving plenty of runway for public investors to accrete value in their portfolios.
Q: Can delaying their IPOs create problems for these growth companies?
Evan: I don’t think enough people are talking about this. There are plenty of good reasons for private companies to do secondaries, but at a certain point, you are kicking the can down the road. Over time, these companies will have increasingly impatient employees eager to monetize their equity. They also run the risk that there won’t be enough value for public investors to capture by the time they do an IPO. If you do secondaries for too long, you may miss your IPO window and the great valuations – and payouts – that were once possible.
Q: What are your thoughts on AI as a near-term source of revenue and profitability?
Evan: AI presents a huge opportunity for growing revenue and scale. However, profitability may be years away.
I believe companies that deploy AI will create the greatest value. We are already seeing companies crossing $100 million in revenue in a matter of months, not years. Is that sustainable? We’ll see. Eventually, though, AI will generate substantial revenue and enormous value, uplifting pricing, capabilities, and competitiveness. Next up is the 10-person, $1 billion revenue company. That is not very far away from where we are today.
Q: Do you think people overestimate the magnitude or near-term payoff of the AI revolution?
Evan: AI, however you define it, will be infused into everything, including AI agents, foundational models, better analytics, and enhanced search capabilities. I have a firm conviction that it will change and transform everything.
One of these AI companies hoping to do an IPO will be the next Netscape, and another will be the next Google. But no one knows which one it will be.
Q: The arrival of DeepSeek in the public mind was a big moment. It wiped out a significant portion of the market capitalization of major companies that day. Is it having a lasting impact on software companies?
Evan: It’s less about DeepSeek specifically having an impact on software companies and more about showing what is possible in a world of open source and how critical that is to innovation. DeepSeek effectively showed that models can be copied, and innovation can be applied to achieve spectacular results. That is why companies are moving so fast and raising so much money. We are still at the beginning of the innovation curve, and that is exciting.
