The Israeli tech ecosystem still largely operates under a familiar narrative: build a company, raise capital, and aim for an exit or an IPO. For years, this approach was almost the only path forward. But in recent years - especially since 2022 - that reality has shifted dramatically. A new route has emerged: a faster, more efficient way to access the US public markets, even without going through a traditional IPO.

According to US market data, the number of IPOs has dropped by tens of percent recently, while the bar for going public has risen significantly. In the past, companies could go public with tens of millions in revenue. Today, the expectation is often hundreds of millions, alongside a clear path to profitability. For many Israeli companies, such a goal simply isn’t realistic.

At the same time, private capital has become more difficult to access. Rising interest rates and declining liquidity have made funding rounds more expensive, slower, and more demanding in terms of concessions from founders. The result is that a growing number of companies - particularly those that already have a proven product and market - find themselves without a clear path forward.

It is precisely at this point that an alternative model is beginning to take shape. It is less talked about but increasingly relevant: a pathway that allows small-to mid-sized, mature companies - not large corporations - to enter the public market by integrating into an existing publicly traded company.

Instead of waiting for a volatile and uncertain IPO window, a US-based public company acquires a controlling stake - typically around 51% - in a technology company and integrates it into an already listed structure. For the acquired company, this means relatively quick access to the public markets, along with investor exposure, liquidity, and the ability to continue scaling within an existing framework.

This is not an IPO in the traditional sense. Rather, it is entry into the public market through an existing structure - a model that enables companies to reach Nasdaq earlier, even if not as standalone public entities.

Importantly, this model is not designed for large companies. Quite the opposite. It is particularly well suited for companies generating tens of millions of dollars in revenue, with a working product and real customers, but without the scale required for an independent IPO. These are the companies that have fallen between the cracks in recent years: too advanced for the seed stage, but too small for Nasdaq.

The advantage here is not only financial - it is also managerial. Unlike traditional venture capital investments, where investors provide capital and strategic guidance, this model is based on deep operational involvement. The acquiring entity takes an active role in management, strengthens processes, introduces financial discipline, and in some cases reshapes how the company operates day-to-day.

This represents a significant shift for many Israeli companies. The local ecosystem excels in speed, creativity, and product development - but often struggles to meet the standards required in US public markets. Various analyses suggest that many companies fail to go public not because of weak technology, but because of managerial gaps: disorganized financial structures, lack of transparency, or difficulty presenting a consistent growth narrative.

This is where the model attempts to bridge the gap. A 51% controlling stake allows the acquiring company to implement real changes while still keeping founders involved. For entrepreneurs, this arrangement creates a compelling trade-off: giving up some control in exchange for access to capital markets, operational infrastructure, and a higher level of management.

In the US, more and more examples of this approach are emerging, particularly in sectors such as cybersecurity, medtech, and AI. These are companies that likely would not have reached a standalone IPO in the near term but have managed to become part of a public entity, grow revenues, and improve performance in a relatively short time.

For example, companies in digital health or cybersecurity that stalled in fundraising have, in some cases, transitioned into divisions within larger public groups - gaining direct access to capital markets. In other cases, companies with proven technology but unstable financial structures have, under new management, achieved the level of transparency and maturity required to operate within a publicly traded framework.

The timing of this model is not accidental. Estimates suggest there are hundreds of technology companies worldwide currently stuck in this middle ground - companies with real products and markets, but no clear path to an IPO. For many of them, the present represents an opportunity to continue growing instead of stalling.

Beyond that, the situation reflects a broader shift in mindset. For years, the endpoint was either an exit or an IPO. Today, more entrepreneurs are beginning to view the public market as a stage along the journey - a platform for growth, not just a finish line.

This model is not suitable for every company, and it does not replace the traditional IPO. Strong, large companies will continue to pursue the conventional path. But for a wide segment of Israeli companies - those that are no longer early-stage startups but not yet large corporations - it offers a real alternative.

In an era where capital is pricier, markets are more volatile, and scaling has become more complex, it is precisely these less conventional pathways that are beginning to redefine how companies reach the world’s largest stage.

The author is Ezra Beyman, Founder and CEO of Reliance Global Group (Nasdaq: EZRA)