Recently, M&A and IPO activity has been anything but exciting. High interest rates, global uncertainty, and cautious investor sentiment have combined to suppress deal flow. Public listings had nearly ground to a halt, with many companies delaying or shelving plans to go public.
However, you wouldn’t think that based on the latest Q1 2025 IPO statistics.
In just the first quarter, global markets saw 291 IPOs raise over $29 billion, a 20% increase year on year. The U.S. recorded its third-strongest Q1 for IPOs in history, with 61 deals, up from 41 in the same period last year.
So, are IPOs back? Not quite.
While the number of listings has surged, the total capital raised has barely moved, increasing by just 2% compared to Q1 2024. That disconnect tells a different story: companies are going public, but they are raising much smaller sums.
What’s driving this trend? Two key forces: the rise of micro-listings and a revival in SPAC activity. Today, we’ll break down these trends in the IPO world and explain why they’ve been so popular so far this year. Let’s dive in.
Micro-Listings 101
Micro-listings refer to IPOs where either very small-revenue companies list on a stock exchange or where larger companies go public while offering only a very small portion of their equity. In both cases, these IPOs raise minimal capital, often just a few million dollars.
These are still classed as formal public listings, but on a much smaller scale than traditional IPOs. Companies usually list on exchanges such as the Nasdaq, where listing requirements and costs are lower than those on more senior boards, such as the NYSE.
Unlike traditional IPOs (which involve large capital raises, global investment bank advisory, and major investor roadshows), micro-listings are lean, fast, and often go unnoticed by the broader market. Their small scale means little marketing is needed, as only a handful of investors are typically required to meet the raise. Their main purpose is usually market access, not fundraising.
The U.S. Nasdaq saw a surge in these listings in the first quarter of 2025, across both small startups and large foreign firms. So what’s driving this sharp increase?
Why Everyone’s Rushing to Go Micro
These sub-$10 million capital raises were everywhere in Q1, but they weren’t just a spontaneous trend. They were a reaction. Companies have been choosing to micro-list so they could beat a Nasdaq rule change that came into force in early April.
The rule change in question has brought two key changes to the Nasdaq IPO process; these are:
- Raised Minimum Capital Requirements: Companies now need to raise at least $15 million in most cases to qualify for a Nasdaq listing, a sharp increase, as previously there were minimal explicit capital raise requirements tied to the IPO itself.
- Only IPO proceeds count: Under the new rule, only proceeds raised from the IPO itself contribute towards the aforementioned minimal capital requirements. Before the rule change, companies could use previously sold shares, such as those from private sales, to meet these needs. However, now these can no longer be included when calculating capital raised in the IPO.
As a result of this rule change, it is now much harder for small companies to qualify for an IPO. It also means that large companies need to offer a larger portion of equity, as a minimum, to complete the IPO process.
The U.S. is the largest capital market in the world, so, in the months leading up to Nasdaq’s rule change, companies rushed to complete IPOs. A U.S. listing gives them access to deeper pools of capital, international investors, and greater visibility. For many, especially foreign firms, it was a now-or-never moment to get through the door before it closed.
The Return of the SPAC
The return of a past IPO trend was also a prominent driver of IPO activity in the first quarter. A special purpose acquisition company, or SPAC, works as a way of taking a company public without that company going through the IPO process themselves.
A SPAC is a ‘blank cheque’ company that has no operations. They raise money through an IPO and then typically have two years to use that equity capital to identify and merge with a normal private company, taking this company public in the process. When this process is complete, it is referred to as a De-SPAC; the new company trades under the name of the original private target company but now trades publicly thanks to the SPAC’s IPO.
SPACs rose to fame in 2021, where they were the latest craze in global finance. Seen as a fast and flexible way to take a company public, everyone wanted in on the action. In 2021 alone, over 600 SPAC IPOs were completed. However, many of these acquisition vehicles merged with speculative or unready businesses, leading to poor performance in the public market. This resulted in investor losses, failed mergers and regulatory scrutiny. The M&A industry was left with a bad taste in their mouth, and the SPAC reputation took a big hit.
The SPACs of today have seemingly struck a middle ground. While the excesses of 2021 are firmly behind us, the structure itself has not disappeared. Instead, SPACs are now approached with greater caution. Sponsors are conducting more thorough due diligence, targeting more mature businesses, and structuring deals with clearer investor protections. The overall quality bar has risen, and the process has become more disciplined.
So why did SPACs see a resurgence in Q1? A few key factors came together.
First, stock market volatility and tariff uncertainty made traditional IPOs harder to time and execute. On the other hand, SPACs offer more flexibility and control over deal structure and timing, which many companies found appealing amidst the unpredictable environment.
Secondly, there is growing optimism that the SEC, under the Trump administration, may take a more relaxed approach to SPAC oversight and disclosure requirements, which some sponsors see as an opportunity to bring deals to market with more flexibility.
These factors, along with the more measured deal-making we’re seeing this time around, helped bring SPACs back into focus in Q1.
While the uptick in IPO numbers might suggest a market rebound, the Q1 data makes it clear why it’s so important to dig a layer deeper. Much of the activity has come from micro-listings and a cautious SPAC comeback, hardly a broad reopening of the IPO market. These trends reflect companies adapting to changes and uncertainty, not surging confidence.
In the case of micro-listings, with the new Nasdaq rules in place, it is likely that Q2 data will show micro-listing activity has fallen back to a normal level.
For SPACs, the outlook is more open-ended. While volumes are still far below their 2021 peak, recent deals and improving sentiment suggest that SPACs could continue to gain traction, especially if market conditions remain volatile and traditional IPOs stay hard to execute.
The moral of the story? Headline stats are just the surface; the real picture is always in the detail.
