For private investors, 2025 marked the first meaningful shift in liquidity since the post-2021 cooldown. The headline numbers were striking: 36 unicorn M&A exits totaling $67 billion, the highest count and value on record. IPO activity also found its footing, with 40 traditional listings restoring a rhythm that looked closer to the 2018–2020 cycle, even if it remained far from the exuberance of 2021.
Yet beneath the surface, the imbalance grew sharper. The global unicorn count expanded to 1,640 companies valued at nearly $7 trillion. More private companies crossed the billion-dollar threshold than exited it. The backlog widened, even as the top tier finally saw liquidity.
For investors, the real question isn’t whether exits are back. It’s which portfolios are actually liquid, and which remain locked in a market where capital is moving, but only in selective directions.
The surge in 2025’s unicorn exits was driven less by a full reopening of public markets and more by the aggression of strategic acquirers. Big Tech and enterprise software giants, under pressure to scale AI capabilities and secure cloud infrastructure, shifted decisively toward buying what they could no longer build fast enough.
Google’s $32 billion acquisition of Wiz and ServiceNow’s $2.9 billion purchase of Moveworks were emblematic of the pattern. Incumbents sought defensible moats—AI agents, automated workflows, cloud security layers—that would take years of internal development to match. In an environment defined by rapid AI commoditization and geopolitical scrutiny, buying speed became the rational choice.
The numbers underscored the pivot. M&A delivered more than three times the capital to unicorn exits than in 2024, jumping from $7 billion to $67 billion. It also outpaced IPO proceeds by a wide margin. Acquirers were willing to pay unicorn-level prices for category-defining assets because the alternative was falling behind in markets where switching costs and data advantages create steep competitive cliffs.
Meanwhile, the IPO route remained uneven. Public valuations stayed volatile, and listing costs—financial, operational, and disclosure-related—remained high. Investors in the public markets favored companies demonstrating profit discipline or clear paths to cash flow, limiting the number of unicorns that could command premium multiples. For many software and AI companies still running with heavy burn or multi-product narratives, the public market window was open only a crack.
In short, M&A wasn’t a luxury trend. It was the pragmatic exit path for companies that couldn’t rely on public markets to reward their long-term story.
Even with the increase in exits, investor portfolios are carrying a structural overhang. The unicorn board, now approaching $7 trillion in aggregate value, is dominated by companies minted during the 2021–2022 boom—years when capital was cheap and growth-at-all-costs strategies were rewarded. Many of these companies remain frozen at valuations they can neither grow into nor exit from.
Of particular concern: 840 unicorns have not raised capital in three years. This signals a mix of distress, down-round pressure, and operational stagnation. For some, the absence of new funding reflects resilience and discipline. For many others, it is a sign of limited runway or strategic drift—classic markers of becoming “zombie unicorns.”
Although the exit pipeline improved in 2025, it remains narrow relative to the supply. Only 78 unicorns exited the private markets this year, while more than 200 joined annually during the peak years. Liquidity is returning, but at a pace that does not resolve the surplus.
The result is a bifurcated environment. AI, cybersecurity, datacenter infrastructure, and select fintech categories are generating exits and attracting both acquirer and public investor interest. But the majority of private companies—those in crowded SaaS verticals, consumer tech, and capital-intensive models—still face prolonged holding periods or valuation resets.
For investors, this overhang is a core portfolio risk. Liquidity may be improving, but it is far from evenly distributed.
Looking into 2026, investors will be watching whether the partial reopening of IPO markets turns into something broader. This year saw a string of notable listings—CoreWeave, Figma, and Klarna among them—which demonstrated that public investors are willing to reward scaled, profitable, or near-profitable category leaders. Still, aggregate IPO proceeds remained roughly 30 percent below 2020 levels, suggesting an incomplete recovery.
One potential catalyst sits on the horizon: the expected Anthropic IPO. If a frontier AI company can secure a premium valuation and maintain post-listing momentum, it may reset investor expectations and widen the window for other high-growth AI leaders. If not, the IPO pipeline could remain narrow.
Given these uncertainties, M&A is likely to continue as the dominant exit channel, particularly for companies that lack the scale or diversification to withstand public market scrutiny. Consolidation dynamics in AI infrastructure, cybersecurity, and fintech still favor buyers with balance sheets large enough to absorb billion-dollar transactions.
For investors, the implication is clear. Liquidity in 2026 will concentrate in a handful of themes, not across the broader unicorn landscape. Portfolio companies outside those winning narratives may need to prepare for strategic sales, down-rounds, or operational restructuring. Waiting for an all-market liquidity resurgence is not a viable strategy.
The next year won’t test whether exits exist—they do. It will test whether portfolios are aligned with the narrow lanes where capital is actually flowing.
