The IPO class of 2020/21
For fast-growing startups, an IPO is often the ultimate goal, a milestone after which the company has “made it” — but how is the class of 2020/21 getting on?
Robinhood, Coinbase, Airbnb and many other high-profile companies were among those to go public in the last 3 years, cashing in on frothy markets. Since then, many have failed to live up to lofty expectations. Bumble, DoorDash and Robinhood shares have all shed at least two-thirds of their value. Coinbase, Rivian and Oatly have fared even worse, all falling at least 80%. That malaise has seen some companies decide that the spotlight of public markets isn’t worth it, with a number selling to private equity, including Weber Grills and McAfee.
Timing is everything
It’d be easy to look at the performance of these companies and conclude that the IPOs were failures — but, from the company’s perspective, it’s almost the exact opposite. Robinhood raised close to $2bn from new investors at its IPO, Bumble netted $2.2bn, oat milk maker Oatly got $1.4bn and Rivian raised a whopping $12bn. Investor sentiment has since turned, but at least each company built a war chest to weather the storm.
Companies that remained private missed out and startups that are burning cash now face the difficult decision of raising funds through a down-round or trying to go public in a market that has no appetite. Most notable is tech darling Stripe, which needs financial breathing room after cutting its workforce. The company is reportedly looking to raise at a $55-60bn valuation, a fraction of what many estimated they would have achieved had they gone public a year or two ago.
