Few startups IPOed this year(2016), but the ones that did soared:;
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There weren’t many tech IPOs this year, but they performed well. Just 14 venture-backed tech companies
went public, according to Dealogic. This compares to 25 last year and
the 40+ we saw in each of the five years before. The last time we had
fewer tech IPOs was in the 2009 financial crisis. Macroeconomic concerns related to oil
prices, China and the Brexit made it a suboptimal time to enter the
stock market. Uncertainty about the presidential election caused some
companies to sit on the sidelines and other pipeline companies may have
been spooked after seeing last year’s tech IPOs trade down. Highly-valued startups like Uber and
Airbnb also didn’t need to go public to raise capital. “A lot of money
continued to flow into private later stage companies,” Jay Hoag, partner
at Technology Crossover Ventures, pointed out. But the majority of the companies who
braved the markets saw great returns, with all but three trading above
their IPO price at the close of the year. Acacia, Impinj and Twilio even saw their share prices more than double. For the most part, these were smaller
deals; we didn’t see any billion-dollar offerings in 2016. The largest
IPO of the year was Nutanix, which raised $274 million. Twilio and Coupa came in second and third, in terms of deal size. Mutual funds T. Rowe Price and
Fidelity had the most tech listings, according to Pitchbook data. No
traditional venture firm saw more than two portfolio companies go public
this year.
But next year is looking brighter, according to industry experts.
There is a sizable list of companies in the pipeline and they are ready
to go public as long as the stock market remains stable. (Big caveat:
Trump’s unpredictable policies could potentially bring about
volatility).
“If you have a stand-out product and the company has been designed to
scale beyond its first act, it’s a great time to go public,” said Ravi
Mhatre, partner at Lightspeed Venture Partners and an early investor in
Nutanix. “Public market investors do have appetite for the best
companies.” Many will be looking at Snapchat’s IPO as a bellwether, although there aren’t many consumer companies ready for the next wave. Expect “an incredibly strong lineup of
enterprise companies,” according to Jeff Thomas, vice president and
head of Western U.S. listings at the Nasdaq. And he would know: After
several years of fighting head-to-head with the New York Stock Exchange,
all but two tech companies listed on the Nasdaq this year.
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