Shutdown-induced bottleneck could drive IPO resurgence
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Shutdown-induced bottleneck could drive IPO resurgence

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Barbara Reinhard

Barbara Reinhard, CFA

CIO, Multi-Asset Strategies and Solutions

Trading Floor

As the government freeze stalls new issues, pent-up demand may spark a flurry of activity once the IPO market reopens. Here’s why the government shutdown has also halted IPOs, and what it could mean for savvy equity investors. 

The U.S. IPO market was gaining traction in 2025, with investor demand rising and over 1,200 privately held billion-dollar startups ready to go public. That momentum has stalled, thanks to the federal budget impasse. The SEC is a federal agency, and like other federal agencies most of its staff are now on furlough. This has created a regulatory bottleneck for IPOs, halting reviews and delaying approvals. 

Despite the current pause, U.S. IPO activity surged over 80% year-over-year in the first half of 2025, reaching $26 billion—the strongest pace since 2021.1 Once the SEC resumes full operations, we expect a swift rebound as issuers move quickly to avoid stale financials and banks race to price deals before year-end. 

For investors in equity funds—especially in small caps—this backlog presents an opportunity. Many of these new listings may enter the market at attractive valuations, offering potential upside for portfolios positioned to capture early-stage growth. 

The SEC has issued interim guidance, but full restoration of SEC operations is needed for the IPO engine to rev up again. The demand is there, the deals are ready, and the market is waiting for Washington to turn the lights back on. 

Maverick Lin contributed to this article.

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