Photographer: David Paul Morris/Bloomberg

A Rising Number of Startups Reckon They'll Never Go Public

Becoming a public company isn't as coveted as it used to be.

While high-flying unicorns such as Uber Technologies Inc. and Airbnb Inc. are largely expected to enter the public market in the months and years to come, a number of entrepreneurs in attendance at the South by Southwest Interactive Festival last week believe their own companies will remain private “indefinitely," according to a new survey.

Nasdaq Private Market surveyed 126 attendees, of which 32 percent were founders or chief executives, and found that a large portion don't expect the day will come when shares in their startups become publicly traded, potentially bolstering a trend that has seen more companies opting to stay private longer. Nearly half of respondents said they expect their businesses to stay private indefinitely—a 62 percent increase from the year before. 

The survey “reveals that startup company leaders are committed to their entrepreneurial efforts with no immediate plans to pursue the public markets to raise capital,” said Bill Siegel, head of Nasdaq Private Market, which provides equity services for private companies, including allowing their investors to cash in on previously tied-up shares. 

These data come as 2016 has started off as the slowest for initial public offerings (IPOs) since the 2008 recession, thanks to poor performance of both the broader U.S. markets in January and February. A recent rally in U.S. stocks, however, has pushed them into positive territory for the year and renewed some Wall Street hopes for an uptick in the number of companies listing on public exchanges.

“I do think [the IPO market] is going to turn,” Frank Maturo, chairman of equity capital markets at UBS AG, said at an event earlier this week. “I really do think it’s just an unusual, extended period of IPOs not moving forward for various reasons.”

Troubling starts for the recent IPOs of prominent unicorns such as LendingClub Corp., GoPro Inc., and Etsy Inc. which are all down more than 60 percent since going public, are also said to have weighed on sentiment. More recent public offerings, including Square Inc. and Shopify Inc., however, have fared somewhat better, down 9 percent and up 6 percent, respectively. 

Nasdaq Private Market's survey included a wide range of startups in terms of money raised and age. Just over 30 percent of respondents had raised less than $2 million, and 22 percent raised more than $50 million. Roughly half were more than a decade old, while 29 percent were between one and three years old.