After Armis and Wiz, Israeli tech is quietly walking away from the IPO dream
Why Wall Street has lost its appeal, and M&A has taken its place.
A day after the sale of Armis for nearly $8 billion, one has to ask why another successful and fast-growing Israeli company, whose executives have been talking about an IPO for years, is withdrawing from the race.
This comes after Wiz, which many had already fantasized about seeing among the largest and most successful Israeli companies on Wall Street, agreed to be sold to Google for $32 billion, effectively giving up on its ambition of becoming a $100 billion public company.
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Armis CEO Yevgeny Dibrov and Wiz CEO Assaf Rappaport.
(Photos: Armis and Omer Hacohen)
Moreover, there are almost no other serious IPO candidates on the horizon. One of the few companies still considered a genuine contender is the cybersecurity firm Cato Networks, owned by veteran entrepreneur Shlomo Kramer, which is believed to be targeting a public offering in 2026. The cybersecurity company Snyk may also join it, but that is essentially the full list.
This marks a new and unusual situation: there are almost no Israeli high-tech companies actively preparing for an IPO. In contrast, the veteran software company AppsFlyer, which had long been discussing a public offering, has also changed course, with its shareholders now reportedly seeking a buyer instead.
So why has a Nasdaq IPO stopped being the ultimate dream of Israeli high-tech entrepreneurs, turning instead into a signaling mechanism, an indication that the company may be ripe for a serious acquisition offer?
The answer lies in the numbers. And they are big, just not in Wall Street’s favor.
An IPO may still fulfill a long-term dream, but in the short term it has become largely associated with disappointment. Just look at the performance of the U.S. IPO market in 2025, which was expected to mark a recovery after two years of drought.
Last year, 202 companies went public, raising a total of $44 billion, historically reasonable figures. There were also several high-profile IPOs the capital markets had long awaited, including fintech company Klarna and ticketing platform StubHub. The Israeli sector also had a relatively solid year, with three sizable IPOs by fintech firms eToro and Navan, alongside veteran mobility company Via.
Yet the shares of all these companies have posted sharply negative returns since their IPOs. Investment house Renaissance’s IPO Index is up just 5% this year, well below the S&P 500, which has risen nearly 18% since the start of 2025, and the Nasdaq, which is up around 22%.
In other words, investors would have been far better off allocating capital to established stocks rather than chasing the new dreams offered by freshly listed companies, an unusual and telling outcome. After three consecutive years of gains in New York’s leading indices, all hovering near record highs, expectations were that the IPO market would be far more vibrant.
Even within the seemingly encouraging numbers for 2025, the fine print tells a different story. The relatively high number of IPOs is inflated by a large volume of very small foreign companies, while the fundraising totals are skewed by a handful of mega-IPOs, chief among them Medline, which went public in the final weeks of the year after raising $6.3 billion, the largest IPO since 2021.
What explains the disappointing performance of what is supposed to be the world’s most coveted IPO market? The scarcity of attractive offerings is partly due to the U.S. government shutdown earlier this year, which delayed the Securities and Exchange Commission’s approval of prospectuses, and partly due to interest rate cuts arriving more slowly than expected.
These factors have prevented the long-anticipated breakout in IPO activity that many had expected by the end of 2025. If that assessment is correct, deals may be pushed into early 2026, but there is little certainty that technology companies will see a meaningful change.
The gap between high-tech companies and Wall Street still traces back to 2021 and its aftermath. Most companies that went public last year did so at valuations below those of their final private funding rounds.
This was also true for Israeli companies eToro and Navan, but even those valuation resets appear insufficient. What Silicon Valley prices at double- or even triple-digit revenue multiples struggles to command more than 10-15 times revenue in the public markets.
For example, if the sale of Armis reflects a revenue multiple of more than 20, then in the public market it would be difficult to justify a valuation above $5 billion, given its reported annual revenue of roughly $340 million.
So even if entrepreneurs still imagine themselves ringing the opening bell and posing with the Wall Street bull, from the perspective of the funds that backed them, an acquisition delivers a faster and far more attractive return. In some cases, it is even preferable to lead another private funding round than to record a valuation markdown on the books, something that often becomes unavoidable after an IPO.
Entrepreneurs are also watching peers who have gone public and are now forced to sweat through quarterly earnings reports, only to be punished by investors. All Israeli companies that listed this year reported respectable operating performance post-IPO, with continued growth, but that proved insufficient.
Public market investors, who have always been quicker to punish than private ones, have become even less patient. This is partly due to the declining average age of traders, as more young investors enter the market through apps like Robinhood and eToro, and partly due to heightened anxiety around the AI revolution.
This also explains the apparent contradiction between soaring headline indices and the chill in the IPO market. Much of the S&P 500’s gains are concentrated in a small group of mega-cap companies driving the AI boom. The market largely ignores everything else, particularly small and mid-sized firms, which make up the bulk of new IPOs.
The only IPOs in 2025 to deliver strong post-listing returns were CoreWeave, a close Nvidia partner with clear exposure to AI infrastructure, and the crypto firm Circle.
Another technical factor compounds the issue: the increasing age of companies coming to market. In the past, the average age of a company at IPO was around 11 years. Today, it is closer to 15. This reflects both the relative ease of raising private capital and investors’ expectations for far higher revenue levels than in the past.
Today, a company with less than $350-400 million in annual revenue simply cannot go public. The extended wait also creates selling pressure once the standard six-month lock-up period expires, as early investors and employees look to cash out, flooding the market with shares.
Will anything change in 2026? Breaking the 2025 drought could generate positive momentum, but weak post-IPO performance continues to deter companies on the fence. For many, it is better to remain a promising private unicorn than to become a publicly traded, but bruised, technology company.
A true game changer would likely require a continuation of the AI rally, essentially another inflation of the bubble everyone is already debating. The success of planned mega-IPOs, led by AI company Anthropic at a rumored $300 billion valuation and Elon Musk’s SpaceX, which aims to make history with an IPO valued at $1.5 trillion, could reignite enthusiasm.
Until then, investment banks will continue earning most of their fees from mergers and acquisitions, not from IPOs.
