Goldman Sachs CEO David Solomon Questions the Need for IPOs Amid Private Capital Boom

Balancing Private Capital Depth with Long-Term Strategic Goals

David Solomon, CEO of Goldman Sachs, recently stirred debate during the Cisco AI Summit in Palo Alto by questioning the necessity for private companies to pursue initial public offerings (IPOs). According to Solomon, the extensive depth of private capital markets now allows firms to raise funds and access liquidity without the operational changes and regulatory scrutiny associated with public markets.

“Today you can get capital privately, at scale… and also get liquidity in the private markets,” Solomon noted. “The reasons to go public, when you really reach an incredible scale, are getting pushed out.”

This trend is particularly evident in the rise of “mega start-ups” like Stripe, OpenAI, and SpaceX, which boast valuations in the tens or even hundreds of billions. These companies have tapped into vast pools of private capital from sources like sovereign wealth funds and venture capital giants such as Thrive Capital. Moreover, secondary markets have enabled employees to cash out their stock, reducing the pressure to list publicly.

The UK Perspective: Shifts in the IPO Landscape

Solomon’s remarks resonate in the UK, where the IPO market has experienced a downturn. London’s Alternative Investment Market (AIM) saw 89 companies delist in 2024, while only 18 new listings emerged. Declining valuations and recent tax policy changes—such as reduced inheritance tax relief—have further dented market confidence.

Despite these challenges, there are signs of a potential resurgence. The UK government and regulators have implemented measures to make London more competitive as a listing venue. Fast-fashion giant Shein, for example, has confidentially filed for a London IPO with a projected valuation of $66 billion, signalling renewed interest in public offerings.

MY ANALYSIS: Strategic Implications for Companies

While private capital provides an attractive alternative to public markets, companies must assess their long-term strategic goals before deciding whether to go public. IPOs bring benefits like increased visibility, access to broader capital pools, and enhanced credibility. However, they also impose heightened reporting obligations, operational scrutiny, and market-driven pressures.

Goldman Sachs’ role in raising $6.5 billion for Stripe in 2023 exemplifies the strength of private markets, but it also highlights a growing divide between private and public funding standards. Solomon’s call for consistency in regulatory oversight across these domains raises important questions about investor protection and market integrity.

In my view, companies at an inflection point should consider a hybrid strategy, leveraging private capital to scale while preparing for an eventual public listing when conditions are favourable. For sectors like technology, where valuations are volatile, this approach balances growth with flexibility.

Conclusion

The evolving dynamics of private and public markets demand a nuanced approach to capital-raising decisions. Goldman Sachs’ David Solomon is right to caution companies about the implications of going public, but for some, the benefits of an IPO still outweigh the costs. As the UK works to revitalise its public markets, businesses must weigh their options carefully to align their financial strategies with long-term objectives.

For ambitious companies, the key is not choosing between private or public markets but determining when and how to use each to their advantage.