a16z’s IPO Megahits Fall Hard

Early last summer, iconic Silicon Valley venture firm Andreessen Horowitz (a16z) was at the top of its game, having delivered the best exit year in its history. From Airbnb to Coinbase to Robinhood, high-profile portfolio companies were launching or planning public offerings with initial valuations in the tens of billions.

Fast-forward nearly a year, and a much more dismal picture emerges. Of Andreessen’s 17 portfolio companies1 that went public at initial valuations of $1 billion or more in roughly the past 18 months, all but one are trading below their offer price. And even the one outlier—Airbnb—is down from its first-day closing price.

The declines are big too. Coinbase, which debuted at an $86 billion valuation in April 2021, saw its market cap fall below $15 billion this week after a disappointing earnings report. Robinhood is down over 75 percent from its IPO price, and Roblox has shed nearly half its value.

Andreessen Horowitz did not respond to requests to comment.

For perspective, we charted the initial and recent market caps of a16z portfolio companies that have gone public since December 2020 below:

And keep in mind, these are just the declines from the initial IPO price.

If we look at how far off these companies are from all-time highs, it looks even bleaker. About six months ago, for instance, Roblox was up 5x from current levels. Buy now, pay later provider Affirm dropped more than 80 percent from its November high. And those are just two examples.

A16z not alone

While these numbers are disheartening, it’s not clear that recently public Andreessen Horowitz portfolio companies are performing worse than those backed by other venture capital firms.

SoftBank Vision Fund, for instance, has plenty of portfolio companies that went public in the past 18 months and have performed terribly. The list includes WeWork (down over 50 percent in six months), tech-enabled real estate broker Compass (down around 80 percent from its IPO price), and smart glass maker View, which just closed at around 50 cents a share after putting out a press release disclosing “substantial doubt about the company’s ability to continue as a going concern.”

Tiger Global Management, the most active global venture investor in 2021, also has its share of flops. Standouts among portfolio companies that went public in the past 18 months include self-driving truck tech developer Embark (down over 80 percent from its initial market cap) and automation software provider UiPath (down over 70 percent since IPO). Tiger’s portfolio also overlaps some with a16z, with both firms backing Coinbase, Roblox and Airbnb, among others.

Are private markets next?

While big drops are most visible for recently public portfolio companies, valuations of still-private startups are also at risk of sharp declines. Private markets, after all, do take their cues from public ones, even if they are typically slower to mark down values.

For a16z, the public tech selloff follows an exceptionally active year of venture investment. Globally, Andreessen ranked fourth among the most active early- through late-stage venture investors in 2021. It ranks in the top one or two for North America, where most of its investments are focused.

The deal pace doesn’t look to be slowing much in 2022. So far this year, a16z has participated in 88 funding rounds, per Crunchbase data. In 2021, by contrast, the firm backed 239 rounds.

Illustration: Dom Guzman

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