A survey has revealed that tech founders are increasingly avoiding IPOs due to the prolonged market downturn.

• An IPO is the long-term goal of only 15% of the 1,550 entrepreneurs surveyed by Techstars.
• Inflation and rising interest rates caused the collapse of the tech IPO market in 2022.
• In March, there was some activity on Reddit when it went public, but the market has been mostly quiet since then and shows no signs of reviving this year.

Tech startups in Silicon Valley often begin in garages and eventually become large publicly traded companies with a global presence. Since the 1970s, the public markets have transformed ambitious tech founders into billionaires.

According to a survey published this week by startup accelerator Techstars, the appeal of IPOs among entrepreneurs is decreasing. Out of the 1,550 entrepreneurs surveyed, only 15% said their long-term goal is an IPO, which is a decrease from 16% a year earlier.

In 2022, the tech IPO market collapsed due to soaring inflation and rising interest rates, which caused investors to become risk-averse and led to a decrease in valuations for many later-stage companies, causing them to delay their plans to go public.

In the previous year, there was a record number of new offerings, with companies such as , , and launching. However, there have been very few noteworthy tech IPOs in the past two and a half years.

According to Techstars' report, the lack of confidence in IPOs rebounding quickly and the trend of startups staying private for longer are further emphasized by this year's data, which shows that IPOs are increasingly out of favor with early-stage entrepreneurs.

The percentage of entrepreneurs who prefer to be acquired by a publicly traded company has decreased from 36% to 34%, while the percentage of those who want to remain private or independent has increased from 28% to 30%.

Investment banks have been gearing up for a rebound.

In April, Colin Stewart, the Global Head of Technology Equity Capital Markets at Morgan Stanley, told CNBC that the IPO market is back and predicted that 10 to 15 tech companies might go public by the end of the year. Stewart cited high-priced and well-traded IPOs as a positive sign for the future.

In March, Stewart made comments after the public launch of the first major social media company to hold an IPO since 2019. This was followed by the public launch of a data center connectivity chip company in the same week, and a data management company in April.

In September, chip designer, grocery delivery company, and cloud software vendor debuted.

New tech companies have been mostly quiet on Wall Street since the pre-2022 stretch. The uncertainty surrounding the presidential election in November is likely to lead to a dearth of deals for the rest of the year.

The upcoming election is not helping the market in H2, according to Athena Theodorou, head of software banking in the Europe region at UBS, who spoke on CNBC's "Squawk Box" on Wednesday. Despite this, Theodorou expects the market to remain muted in H2, though she noted that the IPO market has started to show signs of life in Europe.

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