Venture

The IPO drought was worse than you thought

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The massive gap that the American venture market has seen in technology IPOs has stretched on for effectively 1.5 years, making Instacart’s and Klaviyo’s filings of public-offering paperwork all the more important.

Exit volume for startups has been weak since the end of the 2021, but it’s easy to become inured to new market conditions and lose track of just how long they have dragged on — and how different they are from what came before.


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Crunchbase data indicates that billion-dollar exits — the sort of startup liquidity event that the onset of the unicorn era post-2013 rendered requisite instead of exotically exceptional — began to fall in frequency in the final quarter of 2021. The decline in the pace of billion-dollar exits for American companies includes a drop from 71 in the third quarter of 2021 to 45 in the final quarter of that year; 19 in Q1 2022; and just 17 in the rest of the year.

The total for 2023 through today is 13.

Subscribe to TechCrunch+But there is reason to believe that the figure will improve. Instacart and Klaviyo filing in tandem all but makes that a certainty unless an asteroid decides to make a surprise visit to our planet. But that would just bring us to 15, a paltry number that, as we’ve seen, will still put 2023 behind just the first quarter of the year prior.

A U.S.-only look at the venture market is too narrow to be illustrative of the entire world. Indeed, British chip design company Arm is going public. And activity in India is looking up as well.

But so long as the U.S. venture market remains the world’s largest, it should generate the most billion-dollar exits. To see the liquidity pace in the U.S. slow to a trickle is therefore worrisome without us needing to concern ourselves with being too focused on a single country.

Just how bad has the IPO drought been?

The Crunchbase data we cited above includes all U.S. companies and is inclusive of M&A transactions as well as IPOs (and for pertinent periods, SPACs as well). Excluding all transactions but IPOs, here’s the rundown of tech shops and other private capital-backed companies going out in the traditional manner since the start of 2022:

  • Credo Semiconductor: January, 2022
  • Prime Medicine: October, 2022
  • ACELYRIN: May, 2023
  • Cava: June, 2023
  • Oddity: July, 2023

That’s five total companies. Two of these are biotech shops, and the most recent pair coming to market were backed by private investors — inclusive of some venture capital — but are hardly the sort of startups that we cover fanatically here at TechCrunch+. That leaves Credo Semiconductor, which it turns out is worth a few billion dollars.

So call it one. One real tech IPO since the start of 2022 from the U.S. Given that the timing of an IPO filing and its eventual first trading day can be weeks in length, it’s not impossible that we won’t add to our tally of one (1) tech IPO since the start of 2022 in the United States until the fourth quarter of 2023. Holy hell.

So what?

Well, even with a single-digit tally, the last three months of this year could be the most active quarter by the count of IPOs we do care about. After all, we went months without seeing an S-1 we cared about reading, so the last couple of weeks is definitely an improvement.

And while IPOs are a long process overall, we shouldn’t have too long to wait this time around. “Companies that filed last week can hit the road in early September, right after Labor Day, and go public in the middle of the month,” CNBC expects. (Provided the market complies.)

Perhaps more importantly, as long as these exits do reasonably well, that shouldn’t be the end of it. In fact, even when one of us (me) was perhaps overly pessimistic about the prospect of seeing IPOs this year, we were still willing to second predictions that there might be a flurry of tech IPOs in the second half of 2024 — especially SaaS IPOs.

Let’s double down on the caveat, though: How many IPOs we see next depends in part on how well the first ones to give it a try will do. However, some decacorns simply don’t have a choice in how much longer they can keep their stakeholders waiting for a liquidity event. But others will care more about valuation multiples and IPO performance.

It’s not just about the U.S., either. India might actually be ahead of the trend: Its exit market is set to “remain buzzing in 2023,” Business Insider India wrote. According to the August EY report it quotes, “Indian stock exchanges (BSE and NSE, including SMEs) have ranked 1st in the world in terms of the number of IPOs and 8th in terms of issue proceeds during YTD23.”

That should be enough to keep us entertained through the end of the year. And even if it proves less fast-paced than we would hope, we expect that 2024 is going to be lit regardless.

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