Stellar performing US Tech IPOs are not all good news
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.
Traditional fund-raising was now dead. Investees were asked to accelerate IPO plans (Airbnb).
Markets seemed to be working so heavily on prospective financials as all companies were having a financially slow year.
Investors were hungry for new opportunities, but traditional fund-raising had slowed.
A few start-ups posted unprecedented growth that could only happen in circumstances like this (Doordash).
Why this is not all good:
Capital market allocations at crazy high valuations meant lower early-stage allocations, impacting innovation capital over the next 5 years.
Big boys raised Mega funds (A16Z, LSP, NEA). This usually means smaller funds have lesser LPs to come around to.
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.
Let us all hope 2021 has news that we can just enjoy.
We need it.