IP... No? Tech Startups Putting Brakes on Going Public
January 05, 2015
It seems that venture capital is as easily obtainable as it has ever been lately. And with non-VC firms getting increasingly involved in the venture space, startups have even more resources to land growth capital. These additional resources include alternative asset firms like Tiger Global Management, Coatue Management and Maverick Capital, each of which has raised or plans to raise dedicated VC funds. In 2014, the aforementioned investors participated in deals that poured $6.8 billion into VC-backed companies, many that were at a stage where they'd traditionally have likely gone public; the median post-money valuation of these firms' VC investments last year was $632 million.
Tech public offerings have accounted for a declining portion of the total number of VC-backed IPOs recently, especially from early 2012 until now. In 2Q 2012, 61% of the IPOs completed during the quarter were by companies in the IT sector; that percentage for the final quarter of 2014 was 15%. The valuations that startups have been able to achieve as of late have essentially diminished their need to go public (for now), and that will likely continue to be the case in 2015.
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