Stalled IPOs push venture-backed AI firms toward M&A

992 unicorns and a two-year backlog await public-market exits

The U.S. venture capital market recorded $515.8 billion in dealmaking through the first three quarters of 2026, while just 18 companies went public in the third quarter, according to the PitchBook NVCA Venture Monitor cited by The Wall Street Journal’s CIO Journal. The data leaves 992 active unicorns and a backlog of offerings equivalent to more than two full years of IPOs, pushing venture investors and founders toward mergers and acquisitions as the alternative exit.

The newsletter, The Morning Download, was written by Steven Rosenbush and edited by Tom Loftus. It framed the M&A channel as the practical alternative for companies shut out of public markets and asked readers to “imagine what the prospect for an IPO looks like if your company isn’t OpenAI or Anthropic,” referring to the AI frontier developers that have yet to list on the open market.

The PitchBook data underscores how thin the public-market exit has become. With 18 IPOs completing in the third quarter, the backlog of private companies that “need to or should have gone public by now could account for more than two full years of IPOs,” PitchBook noted in the Venture Monitor. The newsletter reported that this dynamic is keeping “the M&A door” open for venture investors and founders seeking liquidity, and that the channel is likely to remain open.

For AI companies outside the frontier tier, the path to public markets remains particularly constrained. The Morning Download observed that “the market is still waiting for AI frontier developers to go public,” leaving later-stage AI startups without a comparable listing template. The newsletter advised such companies to “use the alternative exit” through M&A, pointing to the door it said is expected to stay open.

The Morning Download did not specify particular M&A targets or identify specific transactions underway. The newsletter is published by the WSJ CIO Journal team, with contributions from reporters Isabelle Bousquette and Belle Lin; Rosenbush serves as chief of the enterprise technology bureau at the WSJ Leadership Institute.