Prediction
IPOs as a proportion of total VC exit value will hit another decade high
Rationale
As unicorns multiply, valuations skyrocket and companies get older (and stay private longer), the need for liquidity grows. With many notable VC-backed companies including Uber, Lyft, Airbnb, Palantir, Pinterest, Slack, Postmates, CrowdStrike and Zoom announcing plans (or are rumored to be planning) to IPO, 2019 is set to be a big year.
Analysts Cameron Stanfill and Alex Frederick break down their prediction that 2019 will see record value in companies that IPO.
Caveat
Increasing volatility in the public markets could discourage companies from making their public debut and cause a significant slowdown in IPO activity. Otherwise, additional avenues for providing VC-backed companies with liquidity could relieve pressure to IPO.
Background
In 2018, the exit market (particularly IPOs) remained healthy. Over $120 billion of value exited across 864 liquidity events, the highest overall exit value since Facebook’s massive IPO pushed numbers up in 2012. The proportion of IPO activity was also up substantially, with 85 companies making their public debut, reaching a total of $63.6 billion in value exited. For the second straight year IPOs returned greater than 50 percent of exit value.
Case study
As mentioned above, VC-backed exit value in 2018 hit the highest mark since Facebook’s IPO helped raise values in 2012. Back then, Facebook raised $16.0 billion in its public listing, at a post-money valuation of $81.2 billion and accounting for 64.8 percent of the total exit value in the year. This one massive debut was enough to propel values to a new high then, what could happen given the number of potentially game-changing IPOs that are poised to unfold in 2019?
Conclusion
Altogether, a number of factors point towards the proportion of exit value from VC-backed IPOs hitting a new decade high next year. Even given some market volatility, if the likes of Uber, Airbnb and Lyft manage to IPO, 2019 could still be a huge year.
Get more insight into 2019’s major VC trends with our 2019 VC Outlook report.