For years, the word startup brings up a picture of a young, innovative, and fast-moving company. However, now we are seeing older companies still being referred to as startups (@ SpaceX’s age of 23 years old) and today’s startups are taking longer to reach an exit or pursue an initial public offering (IPO). In this blog, learn why startups are getting older and what this might mean for private market investors.

Are Startups Getting Older?

According to research from the University of Florida, the median age of a startup at time of IPO was 13.5 years in 2024. While this is down a bit from 15 years in 2022, it is still significantly higher than the 5-9 year median seen from 1980 to 2007.[1]

This trend falls in line with the overall sentiment that startups are staying private longer for reasons like maintaining control, avoiding the scrutiny of public markets, and the unfavorable IPO conditions over the past few years. Knowing that startups are getting older and taking more time to pursue an exit, why are they taking this extra time?

Why Are Startups Taking Longer to Exit?

There are a few reasons why startups may be taking longer to exit and becoming older at time of exit, on average:

1. More Private Capital Available

With more education and access around private market investing, companies are able to raise the capital that they need without turning to the public markets. According to BlackRock, the private market is expected to continue to grow from $13T in 2024 to $20T by 2030.

2. Regulatory and Market Pressures

Another reason startups may be taking longer to exit is the sheer burden of being a public company. With different compliance requirements, reporting guidelines, and pricing determined by the general public has made many startups delay IPOs.

3. Stronger Focus on Profitability Before Exit

The success of an exit like an IPO depends on reception from the general public. Investors and public markets may be demanding more sustainable business models and emphasizing profitability.

What Does this Mean for Private Market Investors?

1. Longer Holding Periods

Since private markets are inhererntly illiquid, at the core, private market investors should be prepared to hold their private investments for a significant length of time before any potential exit could occur. As startups are getting older and taking longer to exit, that means the investors may also want to be prepared for longer holding periods.

2. Later-Stage Investing May Become More Common

With longer holding periods, investors may become more inclined to invest in later-stage private companies than earlier-stage ones. Growth-stage and pre-IPO companies may begin to play a larger role in investor portfolios, while early-stage companies may struggle to find funding.

3. Increased Importance of Secondary Sales

Liquidity options like secondary sales do exist but can be time consuming, expensive, and there is no guarantee that a qualified buyer will be found to provide liquidity to the original investor. However, with longer holding periods and limited liquidity options, investors may attempt to pursue more secondary sales for portfolio companies that either intend to stay private forever, or there is no clear exit timeline.

How Can Investors Adapt?

In order to change with the dynamics of startups getting older, investors may want to consider:

• Adjust Fund Lifecycles– Some VC firms are extending fund durations beyond 10 years
• Diversify Across Stages– Balancing early-stage with growth-stage opportunities may help mitigate liquidity risk
• Leverage Secondary Markets– Proactively managing liquidity through secondary sales if available
• Focus on Sustainable Growth– Prioritizing capital-efficient startups could lead to earlier exits

Final Thoughts

The data is clear: startups are getting older before they exit. While this trend presents challenges, like longer holding periods and liquidity constraints, it can also offer opportunities. While it may take time to adjust investment strategies and we still have some time to go before we see the true impacts of startups getting older, by staying informed, private market investors can educate themselves on what opportunities may be an option for their portfolios.

Are you looking to invest in startups? Sign up for a MicroVentures account to start investing!

Want to learn more about investing in startups? Check out the following MicroVentures blogs to learn more:

• From MVP to Exit: Evaluating Startup Milestones
• Navigating Exit Strategies: IPOs, M&A, and Secondary Buy-Outs
• Unlocking Liquidity: Understanding the Secondary Selling Process
• Primary vs Secondary Investing

 

[1] https://site.warrington.ufl.edu/ritter/files/IPO-Statistics.pdf

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The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.