The number of IPOs experienced a nice increase in 2014 boosted in part by high-profile offers like Alibaba and Lending Club. Kathleen Smith, of Renaissance Capital, describes 2014 as a “very strong year” for IPOs but indications from Q1 of 2015 show things have taken a turn for the worse.
“By the numbers things look pretty bad”, said Smith. While the comparisons are “rough” side by side with the “record year” of 2014, Renaissance now counts over 100 companies that have valuations of over $1 billion that are waiting to go public – like UBER at $42 billion or AirBnB at $20 billion.
Kathleen adds the caveat the “news of the death of the IPO market is premature” but the fact is there are fewer IPOs due to the economic incentive to remain private as long as possible. This makes sense for both company and investor but it also makes it more difficult for a wider audience of investors to participate in these potentially lucrative offers.
With the discussion of Venture Exchanges heating up perhaps 2015 will be the year where we will see a clear path that is simpler, and less costly, for companies choosing to list shares.