With venture capital-backed company valuations having hit new highs in 2013, there has been widespread discussion of a bubble in the industry. One potential indicator of a bubble is the percentage of companies going public that have failed to reach their target price.
Looking at data from the PitchBook Platform, we found that only 20% of VC-backed companies that went public last year—when markets surged roughly 30% from the beginning to the end of the year—did so at prices below their initial offering range, while 25% of companies went public for a higher price than their target range. This year, however, a full third of companies have come in below their target filing range and fewer than 20% of companies have gone public at share prices above their filing range.
To learn more about the reasons for this shift, as well as other IPO pricing details, click here.