The IPO market is warming again, but it won't change how fast businesses go public – TechCrunch

It has been an exciting couple of months for start-ups and public market players, as an increasing number of brands who have been talking about going public for a while, finally marching out the door and receiving enthusiastic receptions at all. Lift, Zoom, PagerDuty and Pinterest all priced over their promotional areas in splashy public offerings. However, Uber is heading for what is expected to be the largest IPO this year by seeking what is rumored to be worth $ 100 billion.

But the industry's observers hope that the companies can begin to go public before they once did, may be a little disappointed. At least, according to industry players with whom we have spoken, it is unlikely that a major shift will happen soon ̵[ads1]1; if ever – again. In fact, absent a dramatic development, it is far more likely that startup will continue to remain private as long as they possibly can.

The figures largely tell the story. According to the investment bank Scenic Advisement, private investors died technology and biotech businesses by $ 130.9 billion last year – well over $ 50.3 billion increased through IPOs and subsequent offers. Meanwhile, says Scenic, the total value of private market investments increased 57.8 percent in 2018, the tenth consecutive year, where private equity sales were worth more than those in public markets. This trend also continues with venture investment flows that far exceed public market investments so far in 2019. Keep in mind that Lift increased $ 4.91 billion in the retail market against the approximately $ 2.34 billion raised in the latest IPO. Dropbox, released last year, raised $ 756 million in its IPO, against the $ 1.7 billion being raised privately. Uber has raised nearly $ 20 billion privately and is expected to raise $ 10 billion in its upcoming bid. (There have also been companies that buck this trend. Zoom increased $ 161 million privately and increased $ 750 million when it was released last week. DocuSign, published last year, also increased more in IPO – $ 630 million – than $ 550 million investors had joined the company when it was still private.) Overall, IPO revenues totaled NOK 47 billion last year, compared with USD 130 billion for private companies, and this relationship cannot change much in 2019 despite for today's IPO hoopla. "At the beginning of this decade, there was relative parity between how much money was raised in venture and how much was increased through IPOs," said Shriram Bhashyam, founder and adviser of the EquityZen secondary trading platform. "But private finance has gone over IPO revenues for some years, and this gap continues to grow."

Although not every private start-up is any public market candidate, it gives you an idea of ​​the direction of how public and private markets continue to shift, he suggests.

The exchange of the public market often recognizes the change. We talked last week with Jeff Thomas, who oversees Nasdaq's Western US operations, and has previously spent several years as President of the Nasdaq Private Market, which was formed in 2013 to offer companies alternative liquidity solutions while still private.

Thomas talked a long time about companies that no longer need to become public to gain access to capital, and it is noticed that there is a "ton of capital" in private companies and predict that much more will come. (Note: The $ 130 billion invested in start-up last year broke the previous $ 105 billion entry that was linked to startup in 2000.)

The complaint of being private is well-known and well-documented. Apart from the simple money available, the founders can avoid investigating research analysts and regulators, not to mention sometimes short-term, public market players who are not afraid to act when they feel unfaithful. Lifting is already sued by shareholders who are angry, the company's shares are down to around 25 percent from the opening day peak. As Bloomberg recently reported, the defendant was sued within 10 weeks of becoming public; Blue Apron was sued within seven weeks of IPO.

Nevertheless, the public markets do not go anywhere, even for well-founded reasons. Even when they are shrinking to the public market, companies that can become public may continue to do so because it is easier for them to buy other companies when their shares are converted into ordinary shares, because the companies will lose employees if they do not go public. (Most private companies limit how much stock employees can sell) and because there is still a certain cache of being a listed company. The latter is particularly important when it comes to charming other partnerships. "Being a listed company and being able to provide visibility in your balance sheet is very useful in customer development," says Thomas.

Taking a company publicly is also a way to deal with inequality in revenue, which has worsened As several private investors invest – already the richest investors in the world – have had close exclusive access to companies in some of their fastest growing years. These trendlines, and their implications, become more apparent. "There are so few people who can participate in the private market on a relative basis," says Thomas. "America stands for life, freedom, and the pursuit of happiness, including having enough money to pay for college and pension. "The ongoing shift towards staying private longer is" making it much harder for individuals to pursue that dream, "he adds.

That's why the Securities d Exchange Commission under current manager Jay Clayton will make it easier for individuals such as mother and pop investors to invest in private companies.

If Clayton comes, it's still an open question. If there is any consolation in the meantime, it may be that the UCITS 'investors, including T. Rowe Price and Fidelity, continue to pour more of their own assets for start-up and recognize that if they want alpha, the private market is where they are will find it. Private shares are still a small part of their assets, but for everyday investors who want access to several of the most beautiful startups they come up with, it may be sufficient. Still.