2020 should’ve been lackluster for IPOs.
But there were 120 IPOs of VC-backed US companies (more than any of the last 5 years!) and that is surprising.
Connecting the dots, it's not surprising.
But it's not all good news.
A year starting with a warning had capital markets slumped and then surging to unprecedented highs.
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Traditional fund-raising was now dead. Investees were asked to accelerate IPO plans (Airbnb).
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Markets seemed to be working so heavily on prospective financials as all companies were having a financially slow year.
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Investors were hungry for new opportunities, but traditional fund-raising had slowed.
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A few start-ups posted unprecedented growth that could only happen in circumstances like this (Doordash).
Why this is not all good:
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Capital market allocations at crazy high valuations meant lower early-stage allocations, impacting innovation capital over the next 5 years.
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Big boys raised Mega funds (A16Z, LSP, NEA). This usually means smaller funds have lesser LPs to come around to.
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Employees in several IPOs ended up lapsing stock options due to the market-driven exercise prices.
Somehow, news in 2020 always came with a pinch of salt.
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Let us all hope 2021 has news that we can just enjoy.
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We need it.
