Going public or staying private

Ever since the ‘08 crash, most startups have taken much longer to go public. Back in the day, internet or tech companies would go public after only a few years with little revenue traction. This shifted dramatically after ‘08 presumably due to the fact that VC money was more readily available.

Fast growing startups could live very comfortably off VC capital and grow without the issues of being a public company. There would be no fluctuating stock price to worry about, no burdensome filings, no scrutiny from the SEC, etc. They could just focus on their goals without the outside noise.

During the pandemic, I had predicted that the trend would likely reverse in the 2020s and companies would flock to the public markets earlier than the predecessors such as Airbnb and Palantir.

So far that prediction has been a mixed results. Lots of companies did hit the public markets sooner through SPACs, but what we quickly found out was that many of these companies that did go public through a SPAC were definitely not ready to be public companies yet.

With the IPO market completely dried up right now, it will be interesting to watch what the rest of the decade will look like. Companies like Stripe seem to be hunkering down and avoiding the public markets for as long as possible.

On the flip side, VC money is now more expensive and we may see a world where companies will need to go public earlier.