The 2024 IPO market has already shown that startups are willing to go public in a less-than-ideal market, and get rewarded for it. However, bankers, lawyers, and investors believe that the recent IPO successes aren’t enough to foster more than a dozen tech IPOs this year.
A Trickle Rather Than A Flood
Greg Martin, co-founder and managing director at Rainmaker Securities, told TechCrunch, "I don’t think we will have the floodgates open like I might have thought. The trickle was delayed; I thought it would happen sooner in Q1. Because of that, I think the floodgates can’t open until 2025, but we could have a healthy flow of 10 to 15 companies for the year."
Martin’s sentiment is echoed by Jeremy Glaser, a lawyer and co-chair of Mintz’s venture capital and emerging companies practice. Glaser believes that despite the recent IPO successes, people need more data than just a few weeks or a month of trading to feel confident.
The Performance of Recent IPOs
Looking at how Klaviyo and Instacart are performing today shows why people remain cautious. Klaviyo is currently trading at a $5.94 billion market cap, down from its $9.2 billion IPO price. Instacart is faring better, but still trading under its initial IPO price of $9.9 billion. It’s currently trading at $9.47 billion.
Glaser said, "I’ve lived through a lot of IPO cycles, you really do need an extended period of time where you are seeing multiple IPOs staying above the IPO price. I don’t know if we are there yet. We have some positive signs but we need to see more companies staying above the IPO price for an extended amount of time."
Timing and Uncertainty
Timing plays a big factor here, too, due to the election. If a couple of companies had come out and made their public debuts at the beginning of the year — and had they done well — it might have given other companies enough time and confidence to get through a full S-1 process before the election.
However, with the election looming, investors are becoming increasingly cautious. Martin said, "The uncertainty around the election is making people hesitant to invest in new IPOs."
M&A: A Silver Lining
For investors looking for returns this year, there is some good news. Glaser’s M&A practice has been the busiest it’s been in a long time. While not as lucrative as an IPO, M&A can provide a steady stream of returns for investors.
Martin said, "M&A is a great option for investors who want to avoid the uncertainty of the IPO market."
Conclusion
The 2024 IPO market is a delicate balance of timing and sentiment. With the election looming, investors are becoming increasingly cautious. However, there are opportunities available for those willing to take calculated risks.
Whether it’s an IPO or M&A, investors need to be prepared for a potentially rocky road ahead.
Topics
- exits
- IPOs
- liquidity
- North America
- Startups
- United States
- Venture
- venture capital
About the Author
Rebecca Szkutak is a senior writer at TechCrunch, covering venture capital trends and startups. She previously covered the same beat for Forbes and the Venture Capital Journal.
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