PitchBook January 05, 2016
By no means was it a banner year for VC-backed IPOs of U.S. companies.
For some context: Public markets are set to likely close out 2015 on a down note. The beginning of the year witnessed an escalation in the Greek sovereign debt crisis, along with an unsuspected unpegging of the Swiss franc from the euro. As we moved along the year, volatility persisted, and we saw sustained fears regarding China's economic strength lead to the country's devaluation of its currency. In additon, August also witnessed a sharp sell of in the high-yield debt market, which only added to the volatility the public markets endured in 2015.
Needless to say, this year didn’t provide the most enticing environment for an IPO. A total of 72 VC-backed U.S. companies have gone public in 2015 so far, raising $8 billion in their combined offerings—both totals down from last year, as can be seen below.
The year has been mostly tough on tech companies testing the public markets. Just 18% of U.S. company offerings have been from the tech industry, including several notably less-than-exciting IPOs from the likes of Square and Box. One of the major surprises of the year did come from tech—just not a U.S. company—when Australia's Atlassian raised more than $460 million in a December flotation that garnered a $4.4 billion valuation. Atlassian hadn't previously received outside investment; Accel Partners purchased its 12.5% stake from employees in a secondary transaction.
U.S. healthcare startups continued to use IPOs as a lucrative exit channel this year. The industry has raised a total of $5.1 billion in 2015 offerings, and though that amount is roughly $500 million less than the year before, it nearly surpassed the combined total that U.S. healthcare raised from 2011 through 2013. Biotechs also continued the relatively quick investment-to-exit cycle that had arisen over the past few years; Spark Therapeutics, for example, went public less than two years after its founding, and at a valuation that jumped 6x from its previous VC round.
As we continue our 2015 in Review coverage, here are some of the year's IPO winners and losers (based on the company's valuation at the time of IPO compared to its previous private valuation):
Fitbit (NYSE: FIT), June 18: Fitness tracking wearables company Fitbit raised the largest VC-backed IPO of the year, receiving more than $731 million in the offering—$448 million of it raised by the company—and grabbing a valuation ($3.4 billion) at nearly a 10x step-up from its last private financing. Fitbit had raised roughly $65 million in VC funding from investors including Felicis Ventures, True Ventures and Sapphire Ventures since its founding in 2007. Since pricing its IPO at $20 and debuting on the market at $30.50, the stock has seen a high of $51.90 with a current price near $30.
Flex Pharma (NASDAQ: FLKS), January 29: The biotech developing treatments for spasms associated with neuromuscular conditions made a quick exit, going public less than five months after receiving its only major private financing from Bessemer Venture Partners, Lightstone Ventures and Jennison Associates. The company raised $86.4 million in its IPO with a valuation step-up of 2.4x from its raise in September 2014. After pricing its IPO at $16, the stock traded as high as $24.82 within the first few months of listing.
Atlassian* (NASDAQ: TEAM), December 10: The Australian company that has developed a suite of project management and business communication software raised $462 million in its public flotation, at the time only being backed by Accel Partners, T. Rowe Price and Dragoneer Investments. The $3.9 billion pre-money valuation created by the offering was roughly 9.3x the estimated valuation that Accel bought into the company at in 2010. Atlassian currently has a market cap of $5.9 billion and is trading around $28.65 at the time of this writing, $7.65 higher than the IPO price.
*Atlassian is headquartered in Australia and does not count toward U.S. company IPO data
Square (NYSE: SQ), November 19: The payment platform had received a valuation of $6 billion when it raised a private investment in October, but when it went public a month later, it saw its value drop to $4.7 billion. The company priced its shares at $9, less than the estimated price range it had filed of $11 to $13. Trading of the stock has been relatively tame, with its price generally in between $12 and $13; the company’s market cap of $4.1 billion is nearly $2 billion off its private valuation.
Box (NYSE: BOX), January 23: Not only is Box’s current price of $14.40 more than $10 lower than its one-time high, but the IPO price valued the company at about 64% of the $2.4 billion private valuation it received with a July 2014 raise. Its investors include Andreessen Horowitz, Bessemer Venture Partners and DFJ.
Apigee (NASDAQ: APIC), April 24: In a $60 million financing in April 2014, Apigee received a valuation of $671 million, but its IPO a year later generated a value of $494 million for the intelligent API platform. Investors in its last private round included Norwest Venture Partners, Third Point Ventures and Wellington Management. The stock hasn’t fared much better since the IPO priced at $17. Shares are trading near $8.50 as of Monday's close.
For more of our 2015 Year in Review content, click here.