Venture capital is a hits business. It’s OK if most of your companies flounder or fail, so long as a few go on to monstrous valuations.
The trouble is, success requires some home runs. And, if we take the long view over the past 10 years, those haven’t panned out as hoped on the public markets.
A Crunchbase analysis of the 20 largest public market debuts of venture-backed U.S. companies founded in the past 15 years reveals that only three are trading above their initial offering prices. And even those three — Airbnb, Pinterest and Snowflake — are still well below where their shares closed in first-day trading.
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For a sense of how our sample set stacks up, we compiled the 20 largest offerings of venture-backed startups founded in the past 15 years that went public in the past 10 years. We then compared initial public valuations to current ones:
Biggest market cap losers
Altogether, valuations for the group are down 42% from when they went public. It’s a dramatic decline for a cohort that includes the most famous startup names dating back more than a decade.
Of course, some have fared worse than others. The title of most billions in market cap erased, for instance, goes to Rivian, the electric-car maker that carried out the largest IPO of 2021. The company has shed $54 billion in market cap since its debut, when it was briefly valued at more than GM and Ford combined.
In second place is Coinbase, which debuted on Nasdaq in April 2021 through a direct listing of shares. The crypto platform has shed over $41 billion in market cap since then, and is down 84% from its first-day closing price.
In terms of steepest percentage decline in share price, no one is close to matching Bright Health Group, the Minneapolis-based health care plan provider that carried out a 2021 IPO at an initial valuation just over $11 billion. Its shares have declined more than 99% since then, and the company has raised doubts about its ability to continue as a going concern.
And these are supposed to be the success stories
Everyone knows that not every hot startup that makes it to the public markets will remain a star. IPO boom times also tend to coincide with market peaks, so initial valuations can be lofty.
What’s concerning with our sample of the largest IPOs of the past 10 years, however, is the absence of any real star performers among the big names. None are even above their first-day prices, let alone returning a multiple to their IPO investors.
It’s even more worrisome when one looks at how much capital has been going into startup investment. Over the past 10 years, investors have plowed more than $1.4 trillion (!) into seed through late-stage and pre-IPO financings.
At the peak, in 2021, a whopping $329.5 billion went into North American startup investments across all stages, per Crunchbase data. That — to put it in context — is more than the total recent valuation of all 20 of the biggest IPOs in our sample set.
To make good on that level of investment, startup backers will need not just hits but grand slams. Their recent batting averages indicate that’s unlikely to happen.
Illustration: Dom Guzman
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