Why startups are going public now

  • In today’s market, public valuations now regularly outstrip private valuations. This is something a startup exec told me recently, and I heartily agreed. One only needs to look at, say, the Snowflake IPO to understand this dynamic. Or the recent JFrog debut. Or how investors initially responded to Lemonade’s IPO. You get the idea. Public investors, and especially their retail investing cadre, are content to bid the value of unicorns up in anticipation of future growth. Much like private investors have long done.
  • This means that it is a good time to go public if you eventually have to, as public equities are near all-time highs. If you are a company that is going to go public in the next few years, why not do so now, when there is demonstrated demand for growth-oriented shares, and you can probably defend your valuation? It just makes sense!
  • That fact is compounded by the sheer number of private companies that are old as hell and need to get the frak out of the private sandbox. If you are a company that really needs to go public, like Airbnb (for technical reasons relating to expiring options), now is great and now is good, as tomorrow may well be worse.
  • And good news, there are so many ways to go public now! Finally, there are myriad options available to companies looking to list. Don’t want to price via a traditional IPO? No worries. How about a direct listing? Don’t want that or a traditional IPO? No worries. How about one of around a dozen SPACs that are hunting for companies to take public?

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