Europe’s IPO market has recovered, but venture-backed companies are increasingly finding liquidity elsewhere.
Europe’s IPO market is back. Listing activity has continued to recover during 2026, supported by stable interest rates, favourable valuations and lower volatility despite geopolitical tensions. Yet beneath that encouraging backdrop lies a more troubling statistic. According to PitchBook, the number of European venture-backed companies with a high probability of listing has fallen by more than 40% since the start of 2025.
At first glance, the figures appear contradictory. If market conditions are finally supportive again, why are there fewer companies preparing to go public? The answer may say less about the health of Europe’s IPO market than the changing nature of venture capital itself.
“The IPO window has mainly been supported by non-backed listings,” explained Navina Rajan, senior EMEA private capital analyst at PitchBook. “All our exit predictor data and backlog numbers are VC-backed companies alone.”
The reopening of public markets has undoubtedly improved conditions for companies seeking to list. But for venture-backed businesses, an IPO is no longer the only – or necessarily the preferred – route to liquidity.
“I believe it’s more structural – companies staying private for longer is a significant factor,” Rajan said. “Especially for VC-backed companies, IPOs are no longer the gold standard for raising financing especially given returns have been weak over the last few years for listings that have occurred, underperforming PE-backed listings. Also, the rise of alternative strategies such as venture debt and secondaries, which service liquidity and financing in this part of the market is at play.”
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That observation reflects a broader shift across private markets. Over the past decade, the ecosystem has evolved far beyond the traditional model in which VC culminated in a public listing. Secondary transactions, venture debt and other forms of private capital increasingly allow companies to raise finance and provide liquidity for investors without entering public markets.
For institutional investors, that evolution has important implications. A shrinking IPO pipeline does not necessarily signal weaker innovation or fewer successful companies. Instead, it suggests that value creation is remaining within private markets for longer, with investors increasingly able to access liquidity through private-market mechanisms rather than relying on an IPO window that opens and closes with market sentiment.
PitchBook’s data also points to geographical differences. The UK, Europe’s largest venture capital market, has seen some of the greatest attrition in its IPO pipeline, reflecting both its maturity and its concentration of biotech and pharmaceutical companies. By contrast, France has held up better and is emerging as an increasingly important hub for AI businesses, potentially supporting future listing activity.
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That does not mean the pipeline will be replenished quickly. While AI companies are attracting considerable investor attention, Rajan does not expect them to replace the current backlog in the near term. “No, in terms of counts and values, AI firms haven’t scaled to the level needed to completely refill the backlog, especially in Europe,” she said, adding that there remains “much more runway for AI firms in Europe to mature and scale before they exit through listing”.
The report therefore paints a more nuanced picture than headline IPO statistics alone suggest. Public markets have undoubtedly become more receptive to new listings, but the structure of venture-backed exits is continuing to evolve. As Rajan notes, “Alternative strategies have and will continue to come more to the fore [including] secondaries and venture debt.”
For private market investors, that may prove to be the more significant trend. The recovery in IPO markets matters, but it no longer tells the whole story. Successful companies can remain private for longer, while investors have a growing range of options to realise value without relying on a stock market listing. If that continues, the IPO may remain an important exit route – but no longer the default destination for Europe’s most successful venture-backed businesses.