2024 Was Slow For Tech IPOs, But 2025 Could Be Different

back 2024 is another slow year For new technology listings, the IPO market is expected to pick up in 2025.

a year ago, The outlook is not optimistic. What has changed?

“I think the market is very confident. Stocks are trading at all-time highs. Ran Benzur legal consulting firm Fenwick & West LLP. And “there’s a shift toward growth, which is obviously a good thing for the tech industry.”

High-growth technology companies preparing to go public in 2022 (before the stock market correction) now have three years to manage costs and grow their businesses.

“We are now far away from the market shock of a few years ago,” Ben-Tzur said. “There’s a lot of uncertainty around valuations, which is not conducive to IPOs or M&A. I think now people know what their valuations are. They have a clearer idea of ​​it.

high profile documents

“On the basis of success Serve Titan IPOs and a number of other companies are slated for IPOs in 2024, with the IPO window expected to expand in 2025. Nina Achajianpartner Index VenturesVia email, he led Index’s investment in ServiceTitan and serves on the software company’s board of directors. Launched on December 12.

“We should see companies begin testing public markets across industries in 2025 – fintech, internet, artificial intelligence, SaaS, etc.,” Achadjian said.

One of the biggest startups widely seen as IPO candidates is Sweden-based Klarnais a high-profile “buy now, pay later” provider that has confidentially submitted an application for a public offering to the U.S. Securities and Exchange Commission. U.S. Securities and Exchange Commission. The company’s most recent funding round in July 2022 valued it at $6.7 billion, down $39 billion from its previous valuation.

Another possible IPO in 2025 is brain systems inc.an AI chip company that filed in September. It was last valued at just over $4 billion in November 2021.

“We’re going to start seeing momentum at the beginning of the year and really accelerate as the year goes on,” Ben-Tzur predicted. He saw early momentum in 2024 but then tapered off.

looking back on the past

Crunchbase tracks the largest U.S. company IPOs Billion dollar exit from board of directors. In 2024, nine such venture-backed companies will go public with more than $1 billion (ServiceTitan is the most recent), while in 2023 there will be 10 companies, including four SPACs.

The largest listings in 2024 spanned multiple industries and remained largely stable. Biotechnology accounts for the proportion of two companies, and the remaining companies are distributed in different technology fields, from social media to semiconductors, from network security to autonomous driving.

Astra Labs and RedditBoth companies went public in March and have been the strongest-performing new stocks this year. In addition to these two companies Hereditary LogisticsAs of December 16, 2024, shares of other large tech IPOs in 2024 were trading near or slightly below their IPO values.

unlock value

Although many companies have postponed initial public offerings over the past three years, going public remains the ultimate goal for most.

“There is a lot of unrealized value that can be unlocked by going public, and I expect that the handful of venture-backed companies that enter the IPO market in 2024 will become leaders in private companies that might otherwise wait for perfect market conditions,” Achadjian said. .

Ben-Tzur agrees: “For many of our clients, going public is a tailwind for the business. It just raises the profile of the company. It makes the company a more credible entity.

It’s also easier for public companies to acquire other companies and raise capital than for private companies, he said.

Serving Titan Pops

ServiceTitan’s December initial public offering opened at a 42% premium to the IPO price, which is a good sign for the public markets as 2024 comes to an end.

“There’s pop music happening there that people didn’t expect,” says Peter WalkerHead of Insights, New Venture Equity Management Platform Charter.

ServiceTitan is a software provider for home service companies Second quarter revenue of $192.99 million The annual growth rate was 23.7%, and the loss narrowed to US$35.65 million.

Ben-Tzur noted that ServiceTitan is not a brand name, nor is it an AI company, and its customers are small businesses rather than large enterprises. “It’s a good barometer for companies that are not necessarily the largest private companies,” he said.

Even in less-than-perfect markets, businesses with strong fundamentals will perform well, Acharjian said. “Even in tough economic cycles, companies with strong unit economics, a sizable TAM and an accurate understanding of customer needs will succeed in the public markets,” she said.

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Illustration: Dom Guzman