More than 100 companies are getting ready to list on Nasdaq after filing confidentially with the SEC, Nasdaq’s CEO Adena Friedman told investing publication Barron’s.
Barron’s called Friedman’s comment “startling,” and we have to agree with that description. If that does come to happen, the IPO drought that the tech industry has suffered through for months will draw to a close sooner rather than later.
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Considering the ripple effect that the lack of liquidity has had on all stages of venture capital investment, this would be excellent news for everyone dealing with startups. If true, of course. And that is why the source matters perhaps just as much as what was said. Confidential filings are obviously hard to track, but Friedman is likely better informed than we are.
Still, we at least know about one company filing confidentially for an IPO: Circle.
As we reported yesterday, the issuer of the stablecoin USDC has filed for an IPO, and unlike the last time Circle tried to list, it is not taking the SPAC route to the public market. We still have a few questions about the company’s finances, but this filing makes us more optimistic about its chances this time around.
Car-sharing platform Turo is also expected to take another swing at an IPO this year, following an attempt to list in 2021.
We’ll have more to say on each of these IPOs if and when they happen, but it’s worth noting the bigger trend here: Tech IPOs are coming back. We don’t know how many of the 100 companies Friedman talked about are tech companies, but it is fair to assume that quite a few of them will be.
IPOs are good
IPOs matter for the same reason farmers love a good season of rain after a drought: When a key element of an ecosystem’s life cycle is missing, it feels great to see it come back.
So it has been with the tech industry and IPOs in recent years. As TechCrunch+ reported yesterday, the backlog of venture-backed startups that are ready to go public is massive and growing by the day. The U.S. alone has more than $1 trillion in late-stage startup equity that’s been locked up, by some estimates, and since IPOs are the traditional way startups return money to their investors, there will likely be a load of VCs grinning ear to ear if the IPO window opens back up.
But there’s more to the situation than investors getting a return on their bets. When a company exits, it returns capital to its backers and employees, allowing the former to invest more and the latter to go forth and build new companies. When that flow of capital slows down, so does the entire engine.
A new wave of IPOs, then, would not only help a bevy of unicorns finally go out and live as public companies, but it’d also boost the health of the U.S. venture capital market. That would be welcome around the world.
The rest of the world may not have to wait, though: As our colleague Manish Singh reported, several IPOs have been announced in India over the last few weeks — by MobiKwik, FirstCry and Ola Electric. While these companies may not be on your radar and millions aren’t billions, the trend is worth noting regardless. We will be tracking it for sure.