VC-Backed Companies that IPO See Smaller Valuation Jump
October 14, 2013
As we approach the end of the year, it’s worth noting the impressive showing IPOs have managed in 2013. There have been 60 VC-backed IPOs through the first three quarters of 2013, up from 50 in all of 2012 and 45 in 2011; and in 2Q and 3Q 2013, public offerings comprised 17.6% and 16.7% of all exits, respectively. The last time IPOs made up such a large proportion of VC exits, Lehman Brothers was still nearly a year away from bankruptcy and the Colorado Rockies were in the World Series. And we have to go way back to the tech bubble to find a year (2000) with more overall IPOs than 2013.
As an exit strategy for VC firms, the IPO has its pros and cons, but higher stock market valuations this year and investors’ desire to hold on to shares longer as their portfolio company continues on its growth trajectory as a publicly traded company are two major reasons for growth in the number of public offerings this year. However, even as IPOs grow as a share of all VC exits, the median percentage growth in valuation from previous round to IPO has fallen below the overall trend, which is more influenced by acquisitions.
To continue reading about how valuations for VC-backed companies compare from last round to exit, click here.
And for more on VC valuations, be sure to check out our VC Valuations and Trends Report, which releases on Thursday.