Startups

Worst Year For Tech IPOs Since 2009

Comment

Image Credits: bfishadow (opens in a new window) / Flickr (opens in a new window) under a CC BY 2.0 (opens in a new window) license.

With just 28 technology companies entering the U.S. public markets, 2015 was the worst year for IPOs since 2009, according to Dealogic. This compares to 62 last year and 48 the year before, with 131 “unicorns” opting to remain private longer.

“We haven’t seen so few tech IPOs since the 2008-09 U.S. financial crisis,” notes Kathleen Smith, principal at IPO ETF Manager, Renaissance Capital. “Biotech has taken over where tech left off.”

The performance of the tech IPOs has also been subpar. Half of the tech companies that have gone public this year are trading below their IPO price, including Etsy which fell 41%. And both Box and Square, went public at market caps that were beneath the valuation of their last private rounds.

Often seen as a bellwether for upcoming IPOs, investors will be watching this year’s struggling tech stocks as an indication of things to come.

[tc_aol_on code=”519329908″]

Nelson Griggs, EVP of Global Listing Services at the Nasdaq, spoke of a “shift” in investor sentiment this year. “They were looking for more bottom-line profits than just the revenue growth.”

Companies which had strong fundamentals, like Atlassian, were able to hit the ground running. Fitbit is up 56% since its June IPO and GoDaddy, which is on the verge of profitability, has risen 68%.

The largest tech IPO of the year was First Data, which raised $2.8 billion. The total volume of all the tech IPOs was $9.4 billion.

Atlassian listed on the Nasdaq, as did Etsy, and Match.com. According to Dealogic, the exchange held half of the U.S. tech IPOs. The New York Stock Exchange had the other half, including Fitbit, First Data, Box and Square.

Amongst venture firms, PitchBook data shows that Bessemer and Sapphire Ventures led the pack, with Bessemer backing Box, Mindbody, Instructure and Shopify. Sapphire Ventures also had four tech IPOs with Fitbit, Square, Apigee and Box. Insight Venture Partners, Glynn Capital Management and Tiger Global Management each had three tech companies go public in the U.S.

The United States IPO market is hardly alone in experiencing market chop. As a recent report highlighted, a number of IPOs from European tech companies were announced, only to be withheld. That list includes Deezer, and HelloFresh. Putting an IPO back into its box is never a strong signal, and generally indicates either a weak market, or weak fundamentals. Or both.

TechCrunch highlights this fact to make it plain that the issues that the United States IPO market is currently enduring are hardly exclusive — weakness is as similar here as it is across the pond.

According to a Fortune report, that is true despite the fact that European startups that do initiate a public offering actually outperform the United States-based counterparts. If you do better, and still can’t get out of the gate, the issues at hand are not small.

The concept was recently stated by Sonali de Rycker of Accel Partners, at TechCrunch Disrupt London. When de Rycker was asked about the European IPO markets by our own Katie Roof, the venture capitalist had this to say, after noting that there are several distinct IPO markets inside the Eurozone:

[…] I would say that the markets in Europe, the IPO window is probably slightly less open than what we are experiencing in the US, but again, the capital markets are fungible, the investors are global…

[…] in general, I think that the dynamics, that are sort of circling around IPOs in the US, are also impacting Europe.

[…] It’s a younger cohort, in Europe. […] So far the European markets have been pretty stable and solid in terms of the companies that have gone public — probably slightly less volatile than the US, but I think that this movie is still being played out. But, we are excited about the companies that are being built here.

Her comments mirror our own analysis. Things are tough out there.

But with many companies in the pipeline, it is likely that we will see a good amount of tech IPOs next year.

Anand Sanwal, CEO of CB Insights, predicts that Cloudera and Dropbox will finally make it through.

“2016 may see 2 types of companies go public,” said Sanwal. “One are the good companies with solid fundamentals. The other set of companies are those that get pushed into going public because the private markets close up on them.”

Griggs said that he expects security, storage and software companies to list. “The first quarter looks relatively strong for deals coming out,” but “the year of the unicorn might be more like 2017.”

More TechCrunch

The spam reached Bluesky by first crossing over two other decentralized networks: Mastodon and Nostr.

The ‘vote Trump’ spam that hit Bluesky in May came from decentralized rival Nostr

Welcome to TechCrunch Fintech! This week, we’re looking at the continued fallout from Synapse’s bankruptcy, how Layer wants to disrupt SMB accounting, and much more! To get a roundup of…

There’s a real appetite for a fintech alternative to QuickBooks

The company is hoping to produce electricity at $13 per megawatt hour, which would be more than 50% cheaper than traditional onshore wind.

Bill Gates-backed wind startup AirLoom is raising $12M, filings reveal

Generative AI makes stuff up. It can be biased. Sometimes it spits out toxic text. So can it be “safe”? Rick Caccia, the CEO of WitnessAI, believes it can. “Securing…

WitnessAI is building guardrails for generative AI models

It’s not often that you hear about a seed round above $10 million. H, a startup based in Paris and previously known as Holistic AI, has announced a $220 million…

French AI startup H raises $220M seed round

Hey there, Series A to B startups with $35 million or less in funding — we’ve got an exciting opportunity that’s tailor-made for your growth journey! If you’re looking to…

Boost your startup’s growth with a ScaleUp package at TC Disrupt 2024

TikTok is pulling out all the stops to prevent its impending ban in the United States. Aside from initiating legal action against the U.S. government, that means shaping up its…

As a US ban looms, TikTok announces a $1M program for socially driven creators

Microsoft wants to put its Copilot everywhere. It’s only a matter of time before Microsoft renames its annual Build developer conference to Microsoft Copilot. Hopefully, some of those upcoming events…

Microsoft’s Power Automate no-code platform adds AI flows

Build is Microsoft’s largest developer conference and of course, it’s all about AI this year. So it’s no surprise that GitHub’s Copilot, GitHub’s “AI pair programming tool,” is taking center…

GitHub Copilot gets extensions

Microsoft wants to make its brand of generative AI more useful for teams — specifically teams across corporations and large enterprise organizations. This morning at its annual Build dev conference,…

Microsoft intros a Copilot for teams

Microsoft’s big focus at this year’s Build conference is generative AI. And to that end, the tech giant announced a series of updates to its platforms for building generative AI-powered…

Microsoft upgrades its AI app-building platforms

The U.K.’s data protection watchdog has closed an almost year-long investigation of Snap’s AI chatbot, My AI — saying it’s satisfied the social media firm has addressed concerns about risks…

UK data protection watchdog ends privacy probe of Snap’s GenAI chatbot, but warns industry

U.S. cell carrier Patriot Mobile experienced a data breach that included subscribers’ personal information, including full names, email addresses, home ZIP codes and account PINs, TechCrunch has learned. Patriot Mobile,…

Conservative cell carrier Patriot Mobile hit by data breach

It’s been three years since Spotify acquired live audio startup Betty Labs, and yet the music streaming service isn’t leveraging the technology to its fullest potential — at least not…

Spotify’s ‘Listening Party’ feature falls short of expectations

Alchemist Accelerator has a new pile of AI-forward companies demoing their wares today, if you care to watch, and the program itself is making some international moves into Tokyo and…

Alchemist’s latest batch puts AI to work as accelerator expands to Tokyo, Doha

“Late Pledge” allows campaign creators to continue collecting money even after the campaign has closed.

Kickstarter now lets you pledge after a campaign closes

Stack AI’s co-founders, Antoni Rosinol and Bernardo Aceituno, were PhD students at MIT wrapping up their degrees in 2022 just as large language models were becoming more mainstream. ChatGPT would…

Stack AI wants to make it easier to build AI-fueled workflows

Pinecone, the vector database startup founded by Edo Liberty, the former head of Amazon’s AI Labs, has long been at the forefront of helping businesses augment large language models (LLMs)…

Pinecone launches its serverless vector database out of preview

Young geothermal energy wells can be like budding prodigies, each brimming with potential to outshine their peers. But like people, most decline with age. In California, for example, the amount…

Special mud helps XGS Energy get more power out of geothermal wells

Featured Article

Sonos finally made some headphones

The market play is clear from the outset: The $449 headphones are firmly targeted at an audience that would otherwise be purchasing the Bose QC Ultra or Apple AirPods Max.

6 hours ago
Sonos finally made some headphones

Adobe says the feature is up to the task, regardless of how complex of a background the object is set against.

Adobe brings Firefly AI-powered Generative Remove to Lightroom

All cars suffer when the mercury drops, but electric vehicles suffer more than most as heaters draw more power and batteries charge more slowly as the liquid electrolyte inside thickens.…

Porsche Ventures invests in battery startup South 8 to boost cold-weather EV performance

Scale AI has raised a $1 billion Series F round from a slew of big-name institutional and corporate investors including Amazon and Meta.

Data-labeling startup Scale AI raises $1B as valuation doubles to $13.8B

The new coalition, Tech Against Scams, will work together to find ways to fight back against the tools used by scammers and to better educate the public against financial scams.

Meta, Match, Coinbase and others team up to fight online fraud and crypto scams

It’s a wrap: European Union lawmakers have given the final approval to set up the bloc’s flagship, risk-based regulations for artificial intelligence.

EU Council gives final nod to set up risk-based regulations for AI

London-based fintech Vitesse has closed a $93 million Series C round of funding led by investment giant KKR.

Vitesse, a payments and treasury management platform for insurers, raises $93M to fuel US expansion

Zen Educate, an online marketplace that connects schools with teachers, has raised $37 million in a Series B round of funding. The raise comes amid a growing teacher shortage crisis…

Zen Educate raises $37M and acquires Aquinas Education as it tries to address the teacher shortage

“When I heard the released demo, I was shocked, angered and in disbelief that Mr. Altman would pursue a voice that sounded so eerily similar to mine.”

Scarlett Johansson says that OpenAI approached her to use her voice

A new self-driving truck — manufactured by Volvo and loaded with autonomous vehicle tech developed by Aurora Innovation — could be on public highways as early as this summer.  The…

Aurora and Volvo unveil self-driving truck designed for a driverless future

The European venture capital firm raised its fourth fund as fund as climate tech “comes of age.”

ETF Partners raises €285M for climate startups that will be effective quickly — not 20 years down the road