, Columnist
The Purpose of an IPO Has Changed
Startups go public not because they need to grow, but because they have peaked and their investors want out.
So far, Snap's gains have all gone to its private investors.
Photographer: Michael Nagle/BloombergOne of the themes of this economic cycle has been that tech startups have stayed private for a long time, choosing to raise money via venture capital rather than going public. When a downturn inevitably arrives, some may regret that.
As prior cycles have shown, even if good startups technically can go public in a bad market, they generally don't -- and that might mean being forced to stay private for several years longer than they want. A few big startups are avoiding that trap as they finally look to go public -- Dropbox and Spotify have forthcoming listings -- but many other mature companies have stayed private, like Airbnb.