Sometime in 2021, the world passed the 1,000-unicorn milestone. This was captured by Crunchbase’s private unicorn board, which is dedicated to tracking startups with valuations above $1 billion; the list kept on increasing and currently tallies 1,284 results.
One of the reasons that number keeps expanding is that new unicorns are being added to the list much faster than they leave it. In venture capital’s ideal world, more would be losing their unicorn status by going public. But that just hasn’t happened as often as needed to balance the unicorn birth rate that investors have funded.
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It’s not just SPACs that have fallen out of favor almost as fast as they boomed — the IPO market has once again vanished. According to a recent EY report, a major IPO destination like London saw a major slowdown in listings this year. Globally, IPO deal volume in the first quarter fell 37% year on year.
However, there is one market where things appear brighter: Asia.
Earlier this week, we wrote about the global IPO window not being entirely closed in light of GoTo’s IPO onto the Indonesia Stock Exchange (IDX). If you add in CB Insights data showing that Asia-based companies accounted for nine out of the top 10 IPOs in the first quarter of 2022, it raises the question: Is Asia a haven for public exits? Let’s explore.
First in troubled class
CB Insights’ venture trends report has some interesting highlights on IPOs in Asia in Q1 2022. With 91 public exits last quarter, Asia had more IPOs than any other region during the period. Underscoring that point, Italian semiconductor company Technoprobe was the only non-Asian company among the largest listed public fundraises. The others were eight China-based companies and South Korea’s LG Energy Solution, which took the pole position with its $98 billion exit valuation, CB Insights reports.
Context matters here: Over that same period since the end of 2021, global IPOs have been in decline. Per CB Insights, there were only 143 IPOs around the world in Q1 2022, compared to 260 in Q4 2021, a 45% quarter-on-quarter decrease.
The dearth of IPOs was particularly stark in some regions. There were none in Africa or in Latin America, when Brazil, for instance, was hoping for an IPO bonanza mere months ago. There were only four in Canada and five in Australia. In Europe and the U.S, there were respectively 20 and 23, paling in comparison to Asia’s tally of 91 IPOs.
Does that mean that Asia was home to most of the world’s exits? No, because IPOs are only one of the liquidity routes available to late-stage companies. If you take M&As and SPACs into account, the U.S. had the largest share of global exits in Q1 with 40%, followed by Europe’s 34%.
Unbundling the paradox
That Asia had the most IPOs shouldn’t obscure another reality: IPOs also declined there. Less than other regions, sure, but a 24% quarter-on-quarter decline is too big to ignore. The slowdown isn’t just in comparison to Q4 2021: There were fewer IPOs in Asia last quarter than in any quarter of 2021. If you multiply Q1 results by four to generate a full-year projection, you get 364, considerably fewer than 2021’s final tally of 445 Asian IPOs.