Heading into 2025, many analysts predicted a boom in growth—from deregulation, increased mergers and acquisitions (we even wrote about this), and IPOs. But so far, that hasn’t exactly played out. Market choppiness from tariffs, weak sentiment, and higher interest rates have all made it harder for companies to raise capital.

That’s why it was a bit surprising to see a big jump in IPO activity this year. As of May, IPO volume is up more than 76% as compared to a year ago. Sounds interesting but the devil is always in the details. While more companies are going public, most of these deals are smaller and a good portion are SPACs—special purpose acquisition companies (more later). 

Check out these numbers:

But so far this year:

• The average IPO deal size is down to $135 million, compared to $236 million this time last year.

• Of the 123 companies who have gone public in 2025 so far, 35 (28%) are SPACs (the last two years were 25% and 16%).

• Total gross proceeds are tracking at $11.7 billion, versus $13.9 billion this time last year.

Investors also haven’t shown much enthusiasm for these new names. Take this year’s biggest listing—Venture Global Inc., a natural gas supplier. It raised $1.75 billion, slightly ahead of the biggest IPO from this time last year. But since its debut, the stock has fallen nearly 60% after opening with a -3.8% loss.

Let’s talk about SPACs. 

A SPAC is a publicly traded shell company created for the sole purpose of acquiring a private company and taking it public, bypassing the traditional initial public offering (IPO) process. It's also known as a "blank check company" because it raises capital through an IPO without a specific acquisition target in mind. Now with SPACs, time is of the essence. They typically have between 18-24 months to find a target company, if not they must dissolve.

Back in 2021, SPACs were all the rage, accounting for over 63% of all IPOs. I personally knew a few new “SPAC CEOs”—which tells you just how hot they were. Most fizzled out and many never found a target company. And yet, so far this year, SPAC listings are on pace to surpass 2023 and 2024 levels. 

The ideal environment for SPACs has excess liquidity, low interest rates, low volatility, and strong investor appetite. Considering today's market backdrop looks nothing like those boom years, it’s surprising to see a rise of SPACs.

So why are SPACs popping back up? 

• Many companies are preparing behind the scenes so they can move quickly when conditions improve. For some, SPACs still offer flexibility and faster timelines than traditional IPOs. 

• It could be an early sign of growing investor optimism, as companies begin to test the waters ahead of a potentially more stable environment. 

But we’re still a ways away from an IPO resurgence. For real momentum to build, we’ll need to see high-quality, well-known companies step forward—for example, a name like Stripe with its estimated $91.5 billion valuation. And just as important, these IPOs need to perform well in the aftermarket. That means delivering on growth expectations, proving profitability, and showing investors there’s value beyond the debut. 

So while the increase in IPO volume is encouraging, investors are still in “show me” mode.