Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

The IPO market finally showed signs of life in 2024. Deal volume climbed 38%. Proceeds jumped over 50% year-over-year. It's not 2021 levels, but it's progress.

For angel investors who've been sitting on illiquid positions for years, this matters. IPOs represent one of the few ways early-stage investors actually get paid.

While investor confidence is strong, volatility and market uncertainty may limit the IPO window in 2025. The market is opening, but it's not wide open.

What's Actually Happening with IPOs

Global IPO proceeds hit $126.10 billion in 2024, up 5% from 2023's dismal $120.13 billion. That's improvement, but we're still way below the highs of 2021.

The story gets more interesting when you look at what's driving the recovery. Healthcare and life sciences dominated listings in 2024. Tech came back but stayed more selective. AI companies continue to be hot commodities within the IPO market, with strong investor interest helping drive IPO proceeds to nearly double from 2023 to 2024.

Elizabeth Yin, co-founder and General Partner at Hustle Fund, has seen this pattern before: "Investors are backward thinking. If your local market hasn't historically had big exit opportunities, they will factor that into the valuation."

That creates a chicken-and-egg problem. Markets without IPO history struggle to build IPO pipelines. But understanding this dynamic helps you think about which companies actually have a path to public markets.

The Exit Environment Is Changing

Only about 13% of angel-backed startups exited via acquisitions or IPOs in 2025, compared to 6% for non-angel-funded companies.

Those aren't great odds. But they're better than the alternatives.

The typical angel investor expects a 24-28% IRR across their portfolio. Top performers hit 35-40%. You need exits to achieve those returns, and IPOs represent one of the highest-value exit paths.

"The math of venture capital can be complicated," Eric Bahn, co-founder and General Partner at Hustle Fund, explains in our fundraising guide. "VCs invest in dozens of companies expecting the majority of them to fail. The one or two startups that give investors a 100x return will pull up the value of the entire portfolio."

The same math applies to angel investors, just with more companies and smaller checks.

What Makes a Company IPO-Ready

Companies are staying private longer, with the median age increasing from 6.9 years a decade ago to 10.7 years in 2025.

This is huge. When you invest in a seed-stage company, you might be looking at 10+ years before seeing liquidity. That's a long time to have your capital tied up.

Why are companies waiting? Private markets offer plenty of capital without the scrutiny and compliance costs of being public. Companies can raise huge late-stage rounds at good valuations without dealing with quarterly earnings calls or short-term investor pressure.

But eventually, many will need to go public. Investors need exits. Employees want liquidity for their stock options. Private market valuations can only climb so high before they need public market validation.

The companies most likely to go public in 2025 and beyond? They'll be more mature than their 2020-2021 counterparts, with many life sciences companies already through Phase 1 clinical trials and tech companies showing clear paths to profitability.

What Angel Investors Need to Know

First, exits take longer than you think. Seed to Series A might take two years. Series A to IPO might take another eight. The companies you invest in today probably won't go public until 2033 or later.

Second, not all exits are created equal. Shiyan Koh, General Partner at Hustle Fund, points out that early investors can get wiped out in exits if later rounds come with heavy liquidation preferences. Public markets don't have that problem, but getting there requires building a business that can sustain public scrutiny.

Third, public market conditions affect private market valuations. When public tech stocks drop 50%, private companies can't pretend they're worth what they were. VC exits remained fairly steady in the fourth quarter of 2024, with proceeds raised bouncing back somewhat after a lackluster third quarter.

This creates opportunity. If you're investing now while private valuations are more reasonable, you're setting yourself up for better returns when exits eventually happen.

Sector Trends to Watch

Healthcare will stay hot. Life sciences companies with mature pipelines and proof of concept in clinical trials are going public. These companies raised at reasonable valuations and can show real progress.

Tech will be selective. The days of pre-revenue tech IPOs are over. Investors want profitability or at least a clear path to it. AI remains a hot commodity, but investors are looking for companies with strong growth, positive cash flow, and discounted valuations relative to peers.

Fintech is coming back. A crypto-friendly regulatory environment could open up exits for blockchain and digital asset companies that have been waiting years.

What This Means for Your Portfolio

The IPO market recovering doesn't mean all your investments will suddenly have exits. Most won't. That's just the reality of early-stage investing.

But it does mean the companies that can make it have a better shot at meaningful liquidity. That's worth something.

Here's how to think about it: when you're evaluating seed-stage investments, ask yourself if you can see a path to IPO. Not will they definitely go public. Can you envision it?

Does the market opportunity support a billion-dollar outcome? Are the founders building something that could sustain public company scrutiny? Is the business model defensible at scale?

If you can't see it, that doesn't mean don't invest. Plenty of great companies get acquired for good returns without ever going public. But understanding the exit landscape helps you build a better portfolio.

The Bottom Line

IPO markets are improving, but they're not back to normal. Companies will keep going public, but selectivity remains high. The firms that make it will be more mature, more profitable, and better positioned for public markets.

For angel investors, this means patience. The 2020 and 2021 vintages are still working their way through the system. Many will fail. Some will exit via acquisition. A handful will go public and generate the returns that make this whole asset class work.

That handful makes it worth it. About 75% of angel investors reinvest their returns into new startups. The cycle continues.

Want to build a portfolio that can weather long hold periods and position yourself for eventual exits? Join Angel Squad to learn portfolio construction, understand exit dynamics, and invest alongside experienced angels who've seen multiple cycles.