The IPO Craze

Strike when the iron is hot. That’s what every mature (or somewhat mature) private company is doing right now and going public. It’s quite amazing what’s going on right now. Seemingly every day there’s an announcement of a company going public whether that’s through the traditional method, a SPAC, or a direct listing.

This is undoubtedly a product of the hot market. Of course, when the market is hot, it’s much easier to go public. Capital is easy to come by as everyone wants a piece of the action.

The deeper trend that’s interesting to follow is the bucking of the trend of the 2010s which is that private companies were staying private longer.

Companies that were born in the recession post 2008 such as Airbnb, Lyft, and Uber stayed private much longer than anticipated with Airbnb just making its debut next week and Uber/Lyft last year.

I suspect that this has to do a lot with the rise of modern venture capital firms that funded the rapid growth of these companies while staying out of the public market scrutiny. Things were well… nice and cozy if you were a well funded VC backed startup in the 2010s.

Companies that were born in the mid to late 2010s were born in a bull market and we’re starting to see these companies hit the public markets.

The 2020s started off on a much different foot. A global pandemic that put the markets in panic turned out to be a temporary phenomenon matched by rising stock prices and new all time highs.

Younger startups are now riding the wave of SPACs to go public much earlier hoping for greener pastures. It’s a fascinating trend that’s going to be interesting to watch in the coming years.