Public Markets

Will 2018 Save The IPO Market?

Morning Report: Heading into the 2018 Prediction Cycle, here’s one from Bessemer.

In today’s Term Sheet, Bessemer’s Byron Deeter predicted that 2018 may be the year when we start to un-clog what we called the “The Coming IPO Traffic Jam.

Before we look at the numbers at play, here’s Deeter:

Let’s fact check. First, are there “more than 200 venture-backed private companies” that are unicorns? As it turns out, yes.

According to the Crunchbase Unicorn Leaderboard, there are 269 global unicorns that have yet to reach liquidity. Indeed, the “Exited” portion of the same tool lists just 69 companies (going back as far as Facebook).

That those firms have been “waiting to capitalize until much longer than we’ve previously seen” is true enough. It’s accepted that the current cohort of successful startups is delaying going public longer than its peers from preceding generations. That’s due to an abundance of late-stage capital, of course.

But perhaps market highs have raised public comp valuations sufficiently that even your friendly, neighborhood unicorn can go public without a haircut?

That brings us to our last Deeter point: “I expect that […] by early Q2 […] we should see many of these high quality companies reveal their financial strength to the public world.”

Fact check: Maybe. Many companies that did manage to go public this year have been financial disappointments. Snap managed to be such a company both before its IPO (it was gross margin negative for how long, pardon me) and after (where did all the revenue growth go?). Even more, firms from Tintri to Cloudera have pushed the boundaries of socially-acceptable red ink.

Will the next set of unicorns be better? Perhaps. And Deeter’s comment seems correctly timed. The good times will not last indefinitely. And if you gambled on not going public in 2017, 2018 might seem like the last chance off the train—assuming you can file before the market turns.

From The Crunchbase Daily:

As solar grows, funding shrinks

  • Solar power installations are on the rise, but startups aren’t generating much investor support. The number of venture deals and VC dollars for solar companies is on track to hit the lowest total in five years, a Crunchbase News analysis finds. Still, a handful of startups are bucking the trend.

Virgin Hyperloop raising $50M

  • Virgin Hyperloop One is reportedly raising $50 million in fresh funding to build outs its high-speed vacuum tube-based transit infrastructure. The company also plans to make Richard Branson, who recently invested in the company and added the Virgin moniker to its name, its chairman.

Amazon may buy Sqrrl

  • Amazon is in advanced talks to acquire cybersecurity software provider Sqrrlfor a price likely a bit above $40 million, Axios reports. Cambridge, Mass.-based Sqrrl, founded in 2012, previously raised about $27 million in venture funding.

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

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