What will it take to reopen the IPO market for venture-backed companies?

Harry Stebbings · Oct 11, 2023

The IPO window will not really open until H1 2025

The late-stage growth market is frozen, which will further delay the IPO window

Scope: framed as a bet against Jason's H2 2024 call

29:19 20VC Roundtable: Are IPOs Back? Is Growth Dead? What Does it Take to Raise a Growth Round Today? How Do VCs Solve The Liquidity Challenge? Will We See a Massive Resetting of Valuations? AI Hype Growth Rounds?

Harry Stebbings · Oct 18, 2023

The IPO window will stay shut longer than people expect, likely not reopening until H2 2025

Databricks and Stripe going public won't be enough to crack open the IPO markets the way people assume

Scope: about the IPO window specifically; he expects nothing in 2024

11:36 20VC: Are LPs Open For Business? What Does it Take to Raise a Fund Today? How Has What LPs Want to See in Fund Investments Changed? Why Do LP Incentive Mechanisms Need to Change? Which Funds Will be Hit Hardest with Beezer Clarkson @ Sapphire Partners

Jason Lemkin · Jan 4, 2024 · hedged

The moment when everyone decides to go public has shifted about six months later, to 2025 rather than H2 2024

It's already January and going public this year would require having kicked off the process, CFO in place and numbers managed sixteen to eighteen quarters ahead; and the mediocre performance of A-plus IPOs like Instacart, ARM and Klaviyo sucked energy out of everybody

Scope: revises his own earlier H2 2024 prediction; says logically it still has to happen

44:34 20VC: Predictions for 2024: What Happens to Early Stage VC Funding, Do a Load of Venture Funds Die, What do LPs Do in 2024, Does Figma Kill the M&A Market, Will IPOs Comeback & What Does a Trump Administration do for Startups with Jason Lemkin @ SaaStr

Jason Lemkin · Aug 9, 2023

The IPO window will be wide open in the back half of 2024, with roughly a good, recognizable IPO every week

Public market multiples have reflated and markets have grown enough that there's appetite for top-tier properties; it takes at least six months to IPO plus extra time for accounting, so leaders can only go out in early 2024 and followers in the back half

Scope: willing to bet five to one; valuations will be good, not insane

63:57 20VC: The Memo: The State of the VC Market: Why Seed Funds Can't Invest in "Hot Startups" Anymore, Why Series A & B is Terrible, Why the IPO Market Will Explode in 2024 & Why VC DD is BS & Every VC Has More Fraud in their Portfolio with Jason Lemkin

Jason Lemkin · Aug 11, 2023

If multiples hold or rise, the backlog of efficient $200M+ revenue companies will all go public in late 2024; 2023 is too soon

Conditions are materially better than twelve months ago — public markets up 30% and every public company is more efficient; his own five investments above $200M revenue growing 30%+ are now efficient and IPO-ready, waiting only for the market to say it's okay

Scope: ignore 2021 as a measurement point; conditional on multiples staying flat or rising

41:43 20VC Roundtable: NEW FORMAT: Why the Seed Investing Model is Broken, How to Make Money at Seed Moving Forward; Who Wins and Who Loses, Why Venture Value Add Platforms are BS and Failed and Why There Will be an IPO per Week in H2 2024

Jason Lemkin · Aug 11, 2023 · hedged

There are roughly 26 good companies at $200M+ revenue that can go public across the 26 weeks of H2 2024 — one IPO per week

What people miss amid the drama of the last four years is how many good companies reached $200M or more and have now become efficient

Scope: admits he may have the timing wrong and be too optimistic; bet Harry at five to one and may lose

42:16 20VC Roundtable: NEW FORMAT: Why the Seed Investing Model is Broken, How to Make Money at Seed Moving Forward; Who Wins and Who Loses, Why Venture Value Add Platforms are BS and Failed and Why There Will be an IPO per Week in H2 2024

David Frankel · Oct 14, 2024

A single mega IPO would be enough to reopen the IPO window, and it will not happen until after the US election

One swallow can make a summer — one or two great IPOs and every JPMorgan and Goldman banker will be telling founders the market is open

Scope: must be a mega-cap listing; a four-to-six-billion-dollar company like Instacart or SeatGeek won't do it; pre-election IPOs are effectively closed

27:56 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Mamoon Hamid · Oct 21, 2024 · hedged

Next year will be a good year for IPOs; the current freeze is mostly everyone waiting until after the election

The pre-election window of about eight weeks produced little activity because issuers are waiting out the election

Scope: expressed as hopefulness

31:20 20VC: Kleiner Perkins' Mamoon Hamid on Investing Lessons from Leading Rounds in Figma, Slack and Rippling | Lessons Building a Generational Defining Firm with Kleiner Perkins | AI: Where Value Accrues, Startups vs Incumbents & Scaling Laws

Harry Stebbings · Oct 14, 2024

Reopening the IPO market requires a listing on the scale of Stripe, Starlink or SpaceX

28:37 20VC: Investing Lessons from FC Seeding Uber, Airtable and Coupang | Why Pro Rata is the Original Sin in VC | Why Liquidity Has Died in 2024 | Why LPs are Pissed with VCs | The Hard Truth About Seed Fund Economics with David Frankel @ Founder Collective

Harry Stebbings · Oct 21, 2024

The IPO window will only reopen when one of the truly big private companies goes out — a Databricks, Stripe or Starlink — not on the back of a Cerebras

31:49 20VC: Kleiner Perkins' Mamoon Hamid on Investing Lessons from Leading Rounds in Figma, Slack and Rippling | Lessons Building a Generational Defining Firm with Kleiner Perkins | AI: Where Value Accrues, Startups vs Incumbents & Scaling Laws

Deven Parekh · Oct 11, 2023

Growth is not dead; the return of tech IPOs and large strategic M&A is a glass-half-full signal

After roughly a year with no tech IPOs and no meaningfully large strategic M&A, Cisco bought Splunk and three companies with real business models went public at real scale

0:00 20VC Roundtable: Are IPOs Back? Is Growth Dead? What Does it Take to Raise a Growth Round Today? How Do VCs Solve The Liquidity Challenge? Will We See a Massive Resetting of Valuations? AI Hype Growth Rounds?

Deven Parekh · Oct 11, 2023

The market has bottomed and is moving in the right direction — this is a glass-half-full moment, not a half-empty one

After a year with no tech IPOs, no large strategic M&A, and every infrastructure software company suffering cloud optimization headwinds, last quarter looked like the bottom, Cisco bought Splunk, and three real businesses went public at scale

38:31 20VC Roundtable: Are IPOs Back? Is Growth Dead? What Does it Take to Raise a Growth Round Today? How Do VCs Solve The Liquidity Challenge? Will We See a Massive Resetting of Valuations? AI Hype Growth Rounds?

Harry Stebbings · Aug 11, 2023

Jason's prediction of an IPO per week in H2 2024 is implausible

Scope: says he hopes Jason is right

41:06 20VC Roundtable: NEW FORMAT: Why the Seed Investing Model is Broken, How to Make Money at Seed Moving Forward; Who Wins and Who Loses, Why Venture Value Add Platforms are BS and Failed and Why There Will be an IPO per Week in H2 2024

Sam Lessin · Aug 11, 2023

He would take the under on an IPO per week in H2 2024

Follows his view that the market strength is concentrated in the biggest players rather than broad

42:45 20VC Roundtable: NEW FORMAT: Why the Seed Investing Model is Broken, How to Make Money at Seed Moving Forward; Who Wins and Who Loses, Why Venture Value Add Platforms are BS and Failed and Why There Will be an IPO per Week in H2 2024

Frank Rotman · Aug 11, 2023 · hedged

Jason's IPO narrative is directionally right but the timing is too early — the window opens in the back half of next year or the year after, not an IPO a week in the back half of this year.

Plenty of companies are 'baking' and ready in time, but the market isn't there yet.

Scope: timing given as 'probably' and 'maybe the year after'

43:51 20VC Roundtable: NEW FORMAT: Why the Seed Investing Model is Broken, How to Make Money at Seed Moving Forward; Who Wins and Who Loses, Why Venture Value Add Platforms are BS and Failed and Why There Will be an IPO per Week in H2 2024

Roger Ehrenberg · Feb 19, 2024 · hedged

The IPO market will show green shoots in 2025 but won't really come back until 2026

Scope: 'I think'; 'probably' 2026

63:16 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital

Ed Sim · Oct 27, 2023

The IPO window reopens only when Jerome Powell signals interest rates are under control and rates start coming down, because forward valuations are directly inversely correlated with rates

A JPMorgan chart shows companies growing over 40% peaked at 35x forward when rates were low and are at 6.8x forward after the hiking cycle

41:44 Ipo window reopens only when the fed signals rate cuts since forward valuations are inversely tied to rates

Brian Halligan · Jan 15, 2024

It is a decent time to IPO and companies like Stripe or Reddit would get a decent valuation

The IPO market is correlated with Nasdaq, which is up, and public tech valuations such as HubSpot's $28BN are decent

71:31 Ipo market tracks nasdaq strength so current conditions already support decent ipo valuations

Deven Parekh · Oct 11, 2023

A slowdown in the late-stage private market does not gate the IPO market — the two are currently disconnected, because the public market has become the late-stage round

There are many software companies with $100-200M of revenue that don't need a late-stage round to go public; late-stage rounds used to exist mainly for third-party validation of value, and Instacart shows there was no benefit in doing one just to tell employees they were worth less than the last round

29:43 Late stage private market slowdown does not gate the ipo market since public market now serves that role

Harry Stebbings · Oct 11, 2023

The three recent IPOs were poor offerings — flat pricing, no anchor buyers stepping up, widely distributed books, and lackluster aftermarket performance — and are not an encouraging signal for the reopening of the IPO window

There were no big buyers in the books and post-IPO performance has been weak

36:32 Recent ipos weak aftermarket signals the window is not really open

Jason Lemkin · Aug 11, 2023 · hedged

2024 may turn out considerably better than it currently feels, even if we never return to 2021 conditions.

2008-09 was vastly worse for founders than today yet the bounce back in 2011-12 was much faster than anyone expected, and public software companies like Atlassian and MongoDB are already saying they're bouncing off the bottom; VCs are bad at judging the slope of the curve early on.

44:34 Faster than expected recovery is possible drawing on 2008 09 precedent

Harry Stebbings · Jan 10, 2024 · hedged

Not many companies will actually go public in 2024

It takes six to nine months to get in shape for an IPO

49:11 Readiness lag of six to nine months limits how many companies actually ipo in 2024

Ed Sim · Jan 10, 2024

The cohort of companies contemplating an IPO is already IPO-ready and could file at will

They have been prepping for the last eighteen months, so it's only a question of whether they file confidentially

49:19 Companies already ipo ready filing is a choice not a readiness gap

Harry Stebbings · Oct 14, 2024

A mega IPO would also unlock LP appetite, not just the IPO window

So many LPs hold positions in those specific companies that a listing distributes capital straight back to them

28:43 A mega ipo would also unlock lp appetite not just the ipo window