Get free updates on tech startups
We’ll send you a myFT Daily Digest email every morning with the latest tech startup news.
A group of Silicon Valley’s largest private technology companies is scrapping long-delayed plans to list its shares publicly. The forthcoming IPO of the chip designer Arm should provide a new indicator of market sentiment.
Grocery giant Instacart, software company Databricks and identity verification startup Socure are all considered candidates for IPOs next year, according to people familiar with their mindset.
They would follow Arm’s blockbuster IPO, which people familiar with the plans said is expected as early as next month.
This IPO is an unusual test of investor mindset: the UK-based chipmaker was public for 18 years before being taken private by SoftBank for £24bn in 2016. However, according to investors, this should make the transition back to the public market easier. It will also make it more difficult for other start-ups to draw firm conclusions.
Arm is among the first big tech companies to venture an IPO in 18 months, with several well-funded startups like Stripe shedding float plans at a turbulent time for public tech stocks.
Instacart could be among the first to go public later this year, according to two people familiar with the matter. The company first announced its intention to list in New York last May, but delayed the plans due to market conditions.
Chip designer Arm is among the first major tech companies to go public in 18 months © Casimiro/Alamy
The food delivery company’s valuation has fallen to $12 billion in May this year from a peak of $39 billion in March 2021, according to people with direct knowledge of the company’s financial details. The decision will depend on whether public markets stabilize later in the year, people said.
Nasdaq, the New York Stock Exchange on which Arm plans to list, has recouped most of last year’s losses in 2023 and investors are increasingly confident that a small number of start-ups planning to list in the year put on hold in 2021 could revive them soon.
Josh Wolfe, co-founder of venture firm Lux Capital, said “a small portion of an IPO window” could open later this year. If so, “singular, category-defining companies…” . . “They would be strong standalone public relistings,” he added.
Databricks, which posted more than $1 billion in sales in June and acquired OpenAI competitor MosaicML for $1.3 billion, is a candidate for an IPO, according to Wolfe, one of its venture capitalists.
Databricks CEO Ali Ghodsi has repeatedly expressed his intention to take the company public, but Databricks “won’t be the first to get out,” according to a person familiar with the plans. The company “will watch and see how [Arm’s IPO] go,” they added.
The decline in private investors over the past year has heightened the urgency: U.S. venture capital fundraising fell 59 percent in the first six months of this year compared to the same period in 2022, and venture capital-backed exits were falling, according to data 79 percent back Refinitiv data.
The $4.5 billion ID verification company Socure hinted at an IPO in 2021, but withdrew its plans when the market weakened. Socure secured a $95 million credit facility from JPMorgan this year, hired a new CFO with IPO experience, and is preparing for an IPO as soon as next year, according to founder Johnny Ayers.
Databricks CEO Ali Ghodsi has announced his intention to take the company public, but claims Databricks “won’t be the first to go public” © David Paul Morris/Bloomberg
“You never want to be among the first to sell the product or you’re exposing yourself to a significant discount because the people who are shopping are taking the risk,” Ayers said. But if “leading companies” like payments processor Stripe, Instacart or fintech start-up Chime have successful IPOs, “other companies will quickly come up,” he added.
Investors are keeping a close eye on social media platforms Reddit and Discord, as well as travel company Navan. They all initially considered an IPO in 2021 or 2022, but were forced to postpone their plans due to the market turmoil.
In March, car rental app Turo filed an update to its IPO filings, indicating it hadn’t given up on plans to go public, first announced in 2021. In May, data automation company Klaviyo, last valued at $9.5 billion, filed a confidential filing for a listing in New York – a first step towards an IPO.
Elon Musk’s SpaceX recently rose to a valuation of nearly $150 billion, making it one of the highest valued private companies in the world, though the Tesla boss has long refused to disclose whether he plans to list the satellite business bring.
Private companies hoping to go public in the weeks following Labor Day on Sept. 4 — usually a busy IPO period — have paperwork to file this month, meaning the week ahead likely has a clearer sense of appetite in the market and will set the tone The rest of the year.
But Stripe, which has long been rumored to be preparing for an IPO, won’t make any moves, according to a person familiar with the company’s mindset.
The payments company raised $6.5 billion through a private stock sale earlier this year, half of its peak valuation of $95 billion. “There is no incentive” to test the public markets this year, the person said.
Comments are closed.