Liquidity Public

Quick Notes On Tech IPOs In Q3 2018

The third quarter is behind us. Since we’ve crossed a milestone, let’s take a minute and peek at who went public last quarter.

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First, some general notes on the state of the IPO market in the third quarter, then a quick detail of which companies we counted in our own IPO mix (Crunchbase News only counts certain companies in our lists), and also a quick note on profits and pops.

I promise to be brief if you promise to laugh at my bad jokes. Let’s go!

IPO Market

Renaissance Capital just released its United States third-quarter IPO report (preview here). The report contains a few metrics we should keep in mind.

In the third quarter, 52 U.S.-listed IPOs raised $11.2 billion. That was the lowest IPO dollars-raised tally of the year, but it was a higher figure in dollar terms than any quarter before the start of 2018 going back into 2015.

The 52 IPO figure is tied for the third-highest tally in the last few years, but is smaller, for example, than the 60 U.S.-listed IPOs that took place in the second quarter, according to Renaissance.

So the IPO market was healthy by historical standards in the third quarter, but it was not a record-setting period due to how much healthier the IPO climate is this year compared to the preceding few.

But that data relates to all IPOs. What about the US-listed tech debuts from the third quarter?

Tech IPOs

We’re keeping a long list of every technology IPO in the United States this year here.

Keep in mind that a company can be based anywhere and make our list, provided that it goes public here. We may change up our definitions, but here’s who we have scribbled down:

More here on each, but it’s a list that is notable for a few reasons.

First, there are a number of international players in the mix: Pinduoduo (China), Endava (UK), Cango (China), Opera (Norway), CooTek (China), Farfetch (UK), LAIX (China), and Viomi (China). That’s 57 percent of the U.S.-listed tech IPOs that we tracked.

Now, we may have missed one, or we may currently exclude a firm that you think should have made the cut (let us know). But it’s still startling to think that so much of the U.S. tech IPO market isn’t made up of domestic companies. It’s true that U.S.-based unicorns are doing well in exit terms compared to the global unicorn cohort,  but there is still a huge amount of illiquidity to be shaken loose.

That’s why the percent of tech companies going public domestically being more than half foreign is worrying. The IPO window is open, yet many American unicorns (let alone richly-valued startups that are worth less than $1 billion) aren’t too close to getting through.

Even more, many companies that are making it through the IPO window are being richly rewarded for passing marks at best.

Pop V. Profit

You don’t have to make money to do well in an IPO at the moment. That bodes well for private unicorns, the majority of which don’t make money.

Indeed, something that we saw this quarter was that profits are completely optional to doing very well out-of-the-gate. Here are a few examples:

And on and on. Consider it evidence that markets are still valuing growth (even sluggish growth!) more than profits. That’s a pretty fact for tech companies that need to list. We’ll see if most get out before the window slams shut.