A declining rate of new “traditional” software initial public offerings among US technology and life sciences listings is expected to continue in 2026, according to California law firm Wilson Sonsini. “This decline is likely attributable, in part, to the rapid advancement of agentic AI,” it says in its latest Technology and Life Sciences IPO Report.
The firm said an improved 2025 IPO environment – still much quieter than the boom 2020-21 period – saw 40 technology and life sciences IPOs transition to public markets (predominantly via Nasdaq) compared with 33 the previous year.
“While software remained the leading sector, software companies represented less than 25% of reviewed IPOs in 2025, down from approximately 50% in 2024,” Wilson Sonsini said.
“We expect this trend to continue in 2026, impacting the number of traditional software IPOs and valuations of companies without strong AI-centric capabilities.
“High-interest areas for technology investment in 2026 are expected to include AI-enabled tools, cloud and AI infrastructure, fintech and security.”
Most US 2025 tech and life sciences IPOs were based in California (19 companies) and New York (7). The tech space produced five US$1 billion-plus IPOs in 2025, seven in the $250-500 million range and five more in the $250-500 million bracket.
“Technology companies with strong revenue growth and profitability visibility or exposure to secular growth themes were well received by investors,” Wilson Sonsini said.
“However, market volatility, geopolitical events, macroeconomic headwinds, including ongoing tariff uncertainty and government shutdowns, and an only slightly more constructive interest rate environment, dampened investor sentiment and pushed some issuers to delay their offerings.
“Overall, investors remained far less interested in higher risk/reward narratives than in the 2020-2021 IPO boom.
“A handful of high-profile companies with potential valuations in the hundreds of billions or even trillions and jumbo deal sizes, have indicated that they are pursuing IPOs in 2026. Their impact on the broader IPO market is uncertain. A positive market reception for those companies may unlock the IPO market for smaller companies in similar or adjacent sectors.
“These prominent companies may also suck the oxygen – and investable dollars – out of the market.”
According to Wilson Sonsini, 2025 tech and life sciences IPO companies paid an average $4.3 million in legal fees, $2.5 million in accounting fees and a whopping $29.9 million in underwriter compensation per expedition into the public trading arena.
