Nearly a year after a deep bear market in new technology offerings, the concept of a hot pre-IPO round sounds like an artifact from a bygone era.
But really, it wasn’t that long ago. In the past year in particular, large late-stage rounds have been all the rage for companies on the cusp of going public.
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In 2021, venture and growth investors funded over 140 rounds for companies that have since gone public, according to Crunchbase data. In total, the funded companies have raised more than $16 billion in pre-IPO financing.
How did that turn out? To put it mildly, most companies underperformed public market expectations. Below, we take a look at the top six recipients of the pre-IPO round and how they’ve fared since the IPO.
Pre-IPO Financing: Raised a total of $10.7 billion in private financing, including $5.2 billion in funding rounds announced in January and July 2021.
Current enterprise value 1: $17.4 billion
What happened: Plymouth, Michigan-based Rivian, which put the first of its electric pickups on the road a year ago, was a darling of startup investors whose key backers included Amazon, Ford and T. Rowe Price. When the company went public in November 2021, public investors were pretty doting, too, pushing the company’s initial market cap to over $100 billion — higher than either GM or Ford. Shares have fallen sharply since then, but thanks to the strong Vehicle demand has not collapsed.
Pre-IPO Financing: A total of over $5.5 billion in private funding has been raised, including $3.4 billion announced in February 2021.
Current enterprise value: $4.1 billion
What happened: Robinhood secured fame and huge VC checks for its fee-free stock and crypto trading platform. When it debuted on the Nasdaq in late July 2021, shares initially surged but peaked shortly thereafter. It’s mostly been down since then, with the company currently being valued well below the $11 billion private valuation it secured the year before the IPO.
Pre-IPO Round: Raised $2 billion in known venture funding over the years, including a $750 million Series F in February 2021.
Current enterprise value: $6.4 billion
What happened: UiPath’s business model combined many buzzwords from tech investors with a SaaS platform that uses robotic process automation to increase employee productivity. The company received an enthusiastic reception after going public in April 2021 and has recorded a market capitalization of over US$40 billion. Shares are now down over 80% from the top, but UiPath shares recently received a boost after a favorable earnings report.
Pre-IPO round: $520 million Series H in January 2021
Current enterprise value: $18.9 billion
What happened: User-generated gaming platform Roblox went public via direct listing in March 2021 amid buoyant market conditions. This resulted in an initial valuation of over $41 billion, with shares nearly doubling again to their November 2021 peak. Since then, shares have steadily declined. While it’s well below Roblox’s initial valuation, it’s still a tremendously valuable venture.
Pre-IPO round: $500 million Series B in January 2021
Current enterprise value: 350 million dollars
What happened: EQRx had a pitch that venture investors were digging up: It’s developing cheaper versions of expensive drugs for oncology and immune-inflammatory diseases. However, after going public through SPAC in December 2021, Cambridge, Massachusetts-based EQRx hasn’t convinced investors that it can deliver on that vision.
Pre-IPO round: $370 million in January 2021
Current enterprise value: $7.1 billion
What happened: Online lender SoFi, which went public through SPAC in June 2021, was one of the better-known fintech debuts of the year. But stocks have trended lower for the past four quarters, with stock trading this month at an all-time low. It’s a common pattern for recently listed companies in the fintech space, which has been one of the hardest-hit sectors in the current downturn.
Figure: Dom Guzman
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