The financing environment for startup companies in the technology sector has changed substantially over the last few years. As evidenced by findings in CB Insights’ latest report, The 2020 Tech IPO Pipeline, tech companies have raised more funding than ever before by accessing the private venture markets. These startups reach unicorn status well before completing an initial public offering or other exit.

While private capital formation continues to rise exponentially, IPO levels have remained relatively stagnant since numbers dropped in 2015. The CB Insights report noted that 22 tech IPOs were completed in 2019. Compared to 19 IPOs in both 2018 and 2017, tech IPO numbers have not seen dramatic increases since dropping to 16 in 2015 from 33 in 2014. The median amount of private venture capital tech startups raise prior to an IPO has significantly increased between 2012 and 2019. In 2019, tech companies raised a median of $281 million prior to going public, compared to $239 million in 2018 and $64 million in 2012. In aggregate, tech companies have raised $26.3 billion in 209 deals in 2019, compared to $21.9 billion in 235 deals in 2018. By contrast, 2012 saw 111 private venture capital raises in the tech sector, yielding $1.6 billion in proceeds—a fraction of 2019 levels.

Not only are tech companies raising large sums of private capital, they are doing so through larger deals, including “mega-rounds”, which are capital raises of $100 million or more. Tech companies in the IPO pipeline completed 102 mega-rounds in 2019, compared to 68 in 2018. The number of tech mega-rounds has surpassed the number of tech IPOs.

The volatility associated with next year’s U.S. election is anticipated to limit the window for companies, in and out of the tech sector, to complete an IPO. This will likely continue the trend of companies raising funds through the private markets, and also considering alternatives to the IPO, such as a direct listing or M&A transaction.