‘Older, Bigger’ IPO’s and the Russell 2000 Performance

This research report explains how a structural shift in public markets has changed where small-cap growth occurs. Over the past 25 years, companies have stayed private far longer—moving from an average IPO age of roughly 4 years in 1999 to approximately 14 years today—which has diverted many high-quality growth companies away from the Russell 2000 and directly into large-cap indices or kept them private entirely. As a result, the Russell 2000 now contains a materially higher proportion of unprofitable companies, while many of the most valuable and innovative growth businesses (such as SpaceX, OpenAI, and Stripe) trade exclusively in private secondary markets. This shift has contributed to sustained underperformance of public small-cap indices relative to large caps and coincided with rapid growth in private secondary market activity, where investors increasingly seek access to the growth historically associated with small-cap investing.

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