By Dave Choate, COO of CAPIS

High-growth companies are choosing to remain private longer, and ordinary investors are paying the price.  

In 1997, there were 7,451 public companies listed on major U.S. exchanges. By the end of 2025, that number had fallen to 3,657 – roughly half. The companies that do go public are waiting longer to do it: the median IPO age was 8 years in 1996. Today, it’s 12. 

Other than real estate, our public equity markets are the primary source of wealth creation for ordinary Americans. When companies delay going public, they are cut out of the most dynamic phase of a company’s growth. That opportunity instead remains behind closed doors, in private markets accessible to only institutional and high-net-worth investors.  

The solution? Make America’s public markets attractive again.    

At their core, public markets require two things: participants actively allocating capital, and investment opportunities competing for that capital. Unfortunately, our current market structure disadvantages both, tilting investors towards passive strategies while over-regulation discourages companies from going public.  

Against this backdrop, the SEC’s proposal to right-size regulations is a timely step toward making our public markets more attractive to small and mid-sized companies. 

A Welcome Step Toward More Accessible Public Markets 

The Commission’s proposed Registered Offering Reform seeks to simplify and modernize reporting requirements around registered offerings, incentivizing companies to go and stay public.   

Most of these requirements made sense in a pre-EDGAR world, when information reached investors slowly and unevenly. For instance, the one-year seasoning requirement and the $75 million public float threshold that the SEC is now proposing to eliminate were designed to ensure that the market had adequate information about an issuer before it could access shelf registration.  

In 1992, before investors had immediate electronic access to SEC filings, those thresholds served as practical proxies for information availability. Today, Exchange Act reports are available electronically and are broadly accessible at effectively no cost. It is warranted to reconsider legacy proxies in light of technological change and modern market practice.  

The proposed amendments would expand Form S-3 eligibility to a significantly broader population of issuers, extend communication and registration benefits that currently accrue only to well-known seasoned issuers and allow more companies to access capital markets in real time. The Commission estimates that the proposal could increase by more than 60 percent the number of issuers eligible to offer an unlimited number of securities on Form S-3, and increase by more than 200 percent the number eligible for all enhanced registration and communication benefits. These are meaningful potential improvements, as speed and certainty of market access affect whether a company views the public route as viable at all.  

The argument against reform typically takes one of two shapes. The first is that investor protections must be maintained. I agree that regulatory modernization is strongest when it removes friction that no longer meaningfully benefits investors while preserving disclosure discipline and sensible guardrails. The Commission has explained that these changes are intended to facilitate capital formation in the public securities markets while preserving appropriate investor protection. The proposal states that companies must still satisfy current Exchange Act reporting requirements, and that the categories of issuers presenting heightened investor-protection concerns remain excluded.  

The second argument is simply “if it isn’t broken, don’t fix it”. But the data cited above suggests it is broken, at least in part. We’ve lost half our listed companies in less than 30 years. The public markets have become less attractive to growth-oriented issuers, which means less price discovery, fewer opportunities for active managers to allocate capital based on merit and a narrower investment universe for the public investors those markets are supposed to serve. 

Regulatory Modernization Can Help Revitalize Our Public Markets 

What the SEC is proposing here is a measured correction and acknowledgment that regulatory requirements should reflect current market realities, not inherited assumptions. The proposal also takes the right approach to state securities law preemption for registered offerings, reducing duplicative requirements that add cost without adding protection. It’s consistent with a broader effort to make the public markets more attractive to issuers who might otherwise conclude that the public route is simply too cumbersome compared with available alternatives. 

The SEC’s Registered Offering Reform is a meaningful step, but not a complete solution. More needs to be done to reduce the burdens of being listed on our exchanges, and we must support the all-important function of active management by eliminating pass-through capital gains taxation on mutual funds. Attracting more growth-oriented companies to our public markets and leveling the tax playing field for active managers would go a long way towards restoring what public markets are supposed to be: the primary engine of wealth creation for ordinary Americans. And it would go further still – cementing the U.S. public markets as the global leader in capital formation.    

The right response to an incomplete solution is to adopt it and continue the work. Markets don’t pause while we design the perfect policy package. The SEC has an opportunity here to signal something important: that the regulatory architecture governing public markets will evolve as markets evolve, that outdated rules will be reconsidered and that the ultimate goal is not rule preservation, but market vitality. For companies evaluating whether the public route is worth it, and for the investors who depend on robust public markets to build long-term wealth, that signal matters.