Tech IPO’s, a bit like reason, restraint, and subtlety, fell off a cliff in 2016.
For starters, we didn’t get one until April – Dell-owned Secureworks’ stock opened for trading on NASDAQ at $13.89, just under the IPO price of $14.
And in the US, there were only 10 more all year. There were 43 in 2015. Atlassian, the Australian software maker, was the final IPO of a dismal 2016 – the worst for tech IPOs in a decade.
“IPO’s are the new down round”, joked VCs and those in the know.
Banking Leads the London Charge
But hey – it wasn’t all bad news – here in London, the LSE helped Health-Tech firm Convatec raise £1.465 billion – the largest European healthcare IPO for over 20 years, and one of the top 10 Healthcare flotations of all time. Notable mentions also go to FreeAgent, who raised £8m on AIM, and CMC markets, Clydesdale and Yorkshire Bank, and Metro Bank, who all listed successfully in 2016.
And that was despite the dreaded Brexit cooling-off period (which presumably lasts a decade? Ed). 32 companies listed in H1 2016 in the UK, on either AIM or the main market, a 14% year on year drop, and the less said about Q3 the better – a 42% year on year decline, with a total value of just £948m.
But everything will change in 2017 right?
Right – call it early season optimism but the ‘techerati’ are predicting big things in 2017 – did they do that in 2016? Hey, we said we wouldn’t talk about that!
In a blog post, Fred Wilson, the VC’s VC, suggests that “the IPO market, led by Snapchat, will be white hot. I expect to see more tech IPOs in 2017 than we have had since 2000.”
And Fred isn’t the only one – “2016 has been a garbage fire. But 2017’s looking up!” enthuses the Register. And they have it on good authority – the CEO of Intel’s VC arm says so.
Wendell Brooks put the difficulties of 2016 down to a shake out of privately help Unicorns (the reason why there are 25 fewer tech companies valued at over $1 billion, 150, than this time a year ago), and fears about the US election (fully realised of course, just as with Brexit in the UK).
2017 Will Deliver What The Public Expected In 2016?
But here’s the thing to understand about all this 2017 IPO TLC – tech firms struggled in 2016 because much was expected but it was too difficult to deliver the big wins that the public, analysts and the media were demanding. AI, VR, AR, IoT, personalisation – progress was made across all of these sectors in 2016, but none really delivered a “wow” moment, despite the best efforts of Oculus, HTC Vive et al. The tech was just not ready.
In the case of genuinely compelling VR, or genuinely useful IoT, we may not see the things we are discussing today happen for another decade, but with the likes of Magic Leap, Deep Mind (founded by UK based entrepreneurs), Amazon’s Alexa, and not forgetting Snapchat’s much hyped IPO, perhaps 2017 will deliver what 2016, even though it wanted to, ultimately could not.
And the same is true of the less glamorous B2B sector. Very little, in terms of genuinely disruptive breakthroughs, actually happened in 2016, depsite the reams of column inches – which makes IPO’ing far too risky a business – who wants analysts and investors asking tough questions that as much as you want to, you cannot answer.
But hope springs eternal and renewed confidence and a sense of readiness could light the touchpaper for a spate of tech IPO’s in 2017.
Maybe we’ll even get to meet Jarvis, Mark Zuckerberg’s cute AI butler (voiced by Morgan Freeman in this vid)