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What Does Last Year’s IPO Class Have To Teach 2023’s Public Market Hopefuls?

Illustration of IPO Bubble letters.

Last year, tech IPOs slowed to a plodding walk. In 2023, they’re down to a crawl.

The outlook for tech IPOs isn’t much livelier for the second half of this year either, with interest rates at their highest in 16 years and lackluster performance from last year’s IPO class further dampening enthusiasm for new public listings.

However, there is a long list of high-growth companies that missed the 2021 IPO window and are waiting in the wings for the market to turn more favorable. If some of those companies decide to go public, they could help thaw the IPO pipeline.

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A large number of companies filed S-1 forms — the regulatory paperwork signaling an intent to go public — in 2021 and 2022, noted Tad Freese of IPO law firm Latham & Watkins in an email to Crunchbase News. While not all of those companies are ready to go public right now, many have already made it through the U.S. Securities and Exchange Commission’s review process and are standing by for market stability, said Freese.

IPO headwinds

But the performance of last year’s IPO class and the public markets this year are significant headwinds.

While the spin-off of Johnson & Johnson’s consumer health division, Kenvue — valued at $50 billion at the end of its first-day of trading on the New York Stock Exchange earlier this month — is a potential signal of a market thaw, it’s not necessarily a good predictor of how venture-backed tech IPOs will be received on the public markets. That’s because in contrast to loss-leading, high-growth tech companies, Kenvue is a well-established, profitable company that owns household brand names including Band-Aid, Tylenol, Neutrogena and Listerine.

So far in 2023, only two U.S. venture-backed companies — LanzaTech and Intuitive Machines, both SPAC mergers — have listed above $1 billion on the public markets, and both are down more than 40% since going public.

That’s according to an analysis of The Crunchbase Billion-Dollar Exits Board, a list of U.S. venture-backed companies’ with first exits valued at $1 billion or more.

How the class of 2022 performed

Tech stocks overall lost a third of their value in 2022.

New listings fared even worse. Of the 29 U.S.-based venture-backed companies that went public at $1 billion or more last year, over two-thirds are trading more than 80%  below their listing price.1

Three of the companies —Amylyx Pharmaceuticals, Credo Semiconductor and Prime Medicine — went public via a traditional IPO, an illustration of how tepid the reception for tech stocks has been. The majority — 25 companies — were SPAC listings. Cannabis product supplier Bright Green was the single direct listing.

However, six of the companies are down less than 25% from the price at listing which include the three companies that went public via a traditional IPO.

The single company of this batch that is well above its listing price is biotech company Amylyx Pharmaceuticals, which develops solutions for Alzheimer’s and other brain diseases.

Other listings currently valued above $1 billion include semiconductor company for 5G wireless Credo Semiconductor, electric motorcycle company LiveWire, gene editing biotech company Prime Medicine, and small modular power company NuScale Power. These four companies are flat or down less than 25%.

Down a lot

The most highly valued listing of the 2022 cohort was New York-based Pagaya, a B2B service that uses AI to assess creditworthiness for loan applications for its partners. It went public via a SPAC merger that valued it at $8.5 billion. The business is now worth less than a tenth of that value, at $637 million, as of May 11, 2023.

The next most highly valued IPO was blockchain infrastructure provider Core Scientific, valued at $4.3 billion in a SPAC merger. As of this writing the company is valued at $129 million less than one-thirtieth of that value.

And neobank Dave, which supports its customers with no overdraft fees and access to early paychecks, was valued at $4 billion on its SPAC merger and is worth around $55 million.

Of the companies that raise the most in funding, peer-to-peer car sharing company Getaround stands out. It raised $541 million and is valued at $32 million. And short-term rental company Sonder raised $529 million and is now worth $91 million.

Looking forward

We will start to see some activity by the fourth quarter of this year, predicts Lise Buyer, founder of IPO advisory firm Class V Group.

“Many raised significant funds in 2020 and 2021, but they are using that cash and will likely be more comfortable adding to the treasury as the current funds are used in growing the business,” she said. And of private funding, “the free-flowing sources of funds so available in previous years, have dried up.”

That said, Buyer notes that IPO hopefuls will need to temper their expectations: She predicts that the lofty public multiples we saw in 2021 aren’t coming back soon, if ever.

Two things need to come together for companies to go public, Buyer said.  First, “the bid-ask spread needs to narrow,” which means IPOs will need to be valued rationally — perhaps smaller with lower valuations than these companies previously aspired to.  If companies grow according to their projections, they can always raise again later, at higher values.

Second, companies will also “need some comfort on the macro environment before offering a financial outlook,” Buyer said. With the current recession uncertainty it is difficult for companies to forecast revenue in the coming quarters and years.

Companies that missed the 2021 IPO window include Stripe, Databricks, Instacart, Chime and Klarna to name a few, all founded over a decade ago.

The general consensus is the markets will likely open up in 2024, said Freese. But he agrees we could see more activity in the second half of 2023.

Either way, it will be interesting to see who is ready to test the markets and what a rational valuation could look like.

Related reading


We include public debuts in 2022 for U.S. venture-backed companies valued at $1 billion or more at the IPO price. We only include a company on its first exit.

Public market valuations for these companies were assessed on May 11, 2023.

Illustration: Dom Guzman

  1. Public market valuations for these companies were assessed on May 11, 2023.


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