LAGUNA BEACH, Calif. (Reuters) – Big cash infusions for startups from an ever-expanding group of financiers, led by SoftBank Group Corp (9984.T) and Middle East sovereign wealth funds, have extinguished hopes that the technology IPO market would bounce back this year.

These deep-pocketed financiers, which have traditionally invested in the public markets but are seeking better returns from private tech companies, have enabled startups to raise more money, stay private longer and spurn the regulatory hassles of an IPO even as they become larger than many public companies.

At The Wall Street Journal D.Live conference this week in Southern California, a number of venture capitalists, entrepreneurs, IPO experts and dealmakers spoke with Reuters about the surprisingly low number of IPOs and pointed to investors such as SoftBank for changing the business of startup financing.

“It’s not surprising if these companies get 10 term sheets,” said Nicole Quinn, an investing partner with Lightspeed Venture Partners, referring to formal offers of investment.

The result is a protracted IPO slump that has contributed to a 50 percent drop in the number of U.S. public companies over the last two decades, according to the Nasdaq. IPOs have fallen especially precipitously since 2014 – the year public market investors, including mutual funds, ramped up investment in private tech companies.

There are some signs of a more active fall for IPOs. Tech companies Switch Inc (SWCH.N), MongoDB Inc (MDB.O) and Roku Inc (ROKU.O) have gone public in the past few weeks, with debuts from ForeScout Technologies Inc and Zscaler Inc ahead.

CORRECTION AHEAD?

Yet many investors are bracing for a market tumble after a sustained rally, raising questions about IPO opportunities for 2018.

Just 12 venture capital-backed tech companies went public in the United States in the first three quarters this year, compared to 27 for the same time period in 2014, according to IPO investment adviser Renaissance Capital.

The drought continues even though both the Dow Jones Industrial Average .DJI and Nasdaq Composite .IXIC are up more than 26 percent in the last year and market volatility is low, normally ideal conditions for an IPO.

Wall Street stock indexes have posted a string of record highs in recent weeks, and the Dow closed above 23,000 for the first time on Wednesday. [.N]

But Barry Diller, a longtime dealmaker and chairman of InterActiveCorp and Expedia Inc (EXPE.O), said the huge funding rounds had eliminated the traditional reason for an IPO.

“There is no reason to be public unless you need capital, and almost all these companies do not need capital,” Diller said.

SOFTBANK-UBER DEAL EYED

Increasingly, the big checks are coming from SoftBank, which in May closed a $93 billion investment fund.

So far this year, it has announced at least 14 investments in technology companies globally, including a $500 million deal with fintech company Social Finance and a $3 billion investment in shared workspace company WeWork, both private and already worth billions of dollars.

SoftBank is in the next week expected to finalize a highly anticipated deal with Uber Technologies Inc [UBER.UL] in which it, along with other investors, would purchase as much as $10 billion in Uber shares, most of them from employees and existing investors in a so-called secondary offering.

“This is the third liquidity option,” said Larry Albukerk, who runs secondary market firm EB Exchange and spoke to Reuters by phone. “It used to be IPO or acquisition.”

SoftBank’s deals are causing venture capitalists to “prepare for more M&A exits,” and fewer IPOs over the long term, said Jenny Lee, managing partner at GGV Capital.

Meanwhile, Nasdaq’s private market business, set up in 2014, facilitated more than $1 billion in secondary market transactions last year, according to Bruce Aust, vice chairman of Nasdaq.

Secondary transactions allow employees and investors to get some cash by selling to other private investors, removing a significant pressure to go public.

The flood of private capital, and the lofty valuations that have come with it, have, paradoxically, created another reason for avoiding an IPO, said Chris Clapp, a managing director with consulting group MorganFranklin.

“Many times with my clients I don’t think they would achieve the same valuation in the public markets,” Clapp said in a phone interview.

Meal delivery company Blue Apron Holdings Inc (APRN.N) took a 27 percent haircut when it went public in June and software company Cloudera Inc (CLDR.N) lost 53 percent of its valuation in its April IPO.

Snap Inc (SNAP.N), the owner of messaging app Snapchat, is down more than 10 percent from its IPO price in March.