IPOs experienced quite the pop in 2021.
There were 2,388 deals last year—a 64% increase from 2020—raising more than $453 billion in assets, according to EY’s annual global IPO report. There were a whopping 416 listings in the U.S. alone.
And then things went south: Half of newly public companies began trading below their debut price tag. The Nasdaq is down 12.49% since the beginning of this year. Interest rates are ticking back up, and the Fed is making plans to lift its federal funds rate several times this year, which will ultimately make borrowing money more expensive for startups. The SEC has laid out some major concerns it has with SPACs, in particular.
All of these market signals could put a crimp on a company’s plans to go public.
“We’re expecting a slowdown—certainly if interest rates continue to tick up,” says Greg Martin, founder of Rainmaker Securities, a private securities transactions brokerage. “These companies are so sensitive to interest rates, because they’re being valued on five, six, seven years of cash flow.”
Of course, companies will still go public—and if you read this newsletter regularly, you know they’re already filing doing so. We may even see more direct listings this year, as more companies take issue with the pricing process and vie to let the markets decide for themselves. All that being said, companies that opt to list this year may need to prepare for a “valuation haircut,” as Martin calls it. He added that investors may put more of a premium on financial metrics as well.
I spoke with Martin and Glen Anderson, co-founder of Rainmaker Securities, about the IPOs they and investors are most anticipating that could happen this year. Here are five companies they say to watch:
Reddit: This is the elephant in the room, and one people have had an eye on for, well, years. The social media platform filed (confidentially) to go public in mid-December, and is expected to go public in the first quarter. It’s raised more than $1.3 billion in funding at a $10 billion valuation, and has been on a hiring spree, announcing just yesterday a handful of new senior leaders. “And, of course, they could be a meme stock on their own platform,” Martin says.
Stripe: Last March, the San Francisco-based payments processing platform became the second-highest valued company in the world. It’s now valued at a whopping $152 billion (Of course, valuations aren’t everything: It has raised $2.2 billion, which is only about double that of Reddit’s funding, and less than some of the lower-valued peers on this list). This is testament to how long a company can stay private without feeling the need to look to the public for funding. It’s done well through the pandemic, signing on a couple hundred thousand companies to use its services.
ByteDance: Speaking of most valuable companies: ByteDance, which owns TikTok and is valued somewhere in the range of $360 billion (It has raised around $14.5 billion, per PitchBook). ByteDance shelved plans to go public last year amid China’s regulatory crackdown on the tech sector, and its CEO announced his resignation last year. “Obviously BD’s IPO was very unsuccessful, and people saw what could happen if the Chinese government decides to put a crimp in your business,” Martin says. Will 2022 deliver a second attempt?
Klarna: All eyes are on the Stockholm-based buy now, pay later giant, which has raised $3.9 billion at a valuation of $45.6 billion. It’s been growing its business in the U.S., planning to launch a credit card there soon, and recently added a browser extension to several of its markets. The company’s CEO said last year that market volatility might be an issue for an IPO, and the Consumer Financial Protection Bureau’s inquiry into the BNPL sector may be something to look out for.
Revolut: Based in London, the foreign exchange and banking company is one of Europe’s most well-funded startups, and it’s been scaling its business in the U.S., not without some challenges. It has raised nearly $1.9 billion and is valued at an estimated $33 billion.
Just for fun, here are a few more companies I am watching that are en route to the public markets:
StubHub: It might not be a great time for the events industry, but it hasn’t stopped StubHub Holdings, the parent company of StubHub, a San Francisco-based ticketing platform, from looking into its options. The company has already filed confidential paperwork with the SEC and it’s considering a direct listing, people familiar with the matter told Bloomberg. Viagogo completed its acquisition of StubHub at the end of last year, and the combined entity is valued at an estimated $4 billion, per Pitchbook.
Sotheby’s: Earlier this month, the New York-based auction house reportedly selected investment bankers for an IPO that could happen this year, per Bloomberg. Sotheby’s reported a record year of sales in 2021, and has garnered a name for itself for its activity in the digital assets world. The company is valued at around $3.7 billion, per Pitchbook, and it’s owned by billionaire Patrick Drahi, who took the company private in 2019.
Oyo Hotels: Indian budget hotel booking company Oyo Hotels, and one of the highest-valued startups in the country at $9.6 billion (it’s raised around $3 billion), started out the IPO process to list on the Bombay Stock Exchange. The company has been adjusting its business model, now offering revenue-sharing arrangements with its hotel partners.
PAG: On the heels of private equity firm TPG’s public listing in the U.S., Hong Kong-based PAG is planning to go public in the region. The firm has around $45 billion in AUM, and it could raise around $2 billion in an IPO, per Bloomberg.
Turo: A car rental marketplace based in San Francisco, filed to go public earlier this month (It has raised a total $496 million at an approximate $1.2 billion valuation). The company has experienced some major setbacks during the pandemic, particularly in Germany.
Whether companies opt to go public, or shelf plans for a while, there’s no shortage of funding in the private markets right now.
Go, Europe, go! We’ve never seen venture capital activity in Europe like we did in 2021. This region is exploding. What’s interesting is that more than $88.4 billion of funding involved non-traditional sources (think investment banks, hedge funds, pension funds, sovereign wealth funds, and corporate venture capital arms), according to Pitchbook. Watch this space, and have a look right now:
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
VENTURE DEALS
- Swiggy, a Bangalore, India-based online food ordering platform, raised $700 million in funding. Invesco led the round and was joined by investors including Baron Capital Group, Sumeru Venture, IIFL AMC Late Stage Tech Fund, Kotak, Axis Growth Avenues AIF- I, and Sixteenth Street Capital.
- Deliverect, a Ghent, Belgium-based online order management platform, raised €130 million ($150 million) in Series D funding. Coatue and Alkeon Capital led the round and were joined by investors including OMERS Ventures, DST Global, Redpoint Ventures, Newion, and Smartfin.
- InstaDeep, a London-based AI-powered decision-making platform, raised $100 million in Series B funding. Alpha Intelligence Capital led the round and was joined by investors including CDIB, BioNTech, Chimera Abu Dhabi, DB Digital Ventures, Google, G42, and Synergie.
- Cellino Biotech, a Cambridge, Mass.-based autonomous cell therapy manufacturing company, raised $80 million in Series A funding. Leaps by Bayer, 8VC, and Humboldt Fund led the round and were joined by investors including Felicis Ventures, The Engine, and Khosla Ventures.
- Darwinbox, a Hyderabad, India-based SaaS-based human management platform, raised $72 million in funding led by Technology Crossover Ventures, Meta Platforms, Spotify, Salesforce, Sequoia Capital India, and Lightspeed India.
- Sibros, a San Jose, Calif.-based connected vehicle platform company, raised $70 million in Series B funding led by Energy Impact Partners and was joined by investors including Fontinalis Partners, Google, Iron Pillar, Qualcomm Ventures, Nexus Venture Partners, and Moneta Ventures.
- Hunters, a Tel Aviv, Israel-based cybersecurity platform, raised $68 million in Series C funding. Stripes led the round and was joined by investors including DTCP, Cisco Investments, Databricks, YL Ventures, Bessemer Venture Partners, Microsoft’s venture fund M12, U.S. Venture Partners, Blumberg Capital, and Snowflake Ventures.
- Humu, a Mountain View, Calif.-based HR technology platform, raised $60 million in Series C funding led by TCV and was joined by investors including Index Ventures, IVP, Silicon Valley Bank, GFC, and Blue Ivy Ventures.
- Passport, a San Francisco-based international shipping carrier built for cross-border e-commerce, raised $39 million in Series B funding. TCV led the round and was joined by investors including Flexport, FJ Labs, Pure Imagination, Sharma Brands CEO Nik Sharma, Kitsch founders Cassandra and Jeremy Thurswell, M13, Resolute, and River Park Ventures.
- Scratchpad, a Walnut, Calif.-based sales software company for taking detailed notes, raised $33 million in Series B funding led by Craft Ventures and was joined by Accel.
- Addionics, a London-based battery technology company, raised $27 million in Series A funding led by Deep Insight and was joined by investors including Insight Partners, Catalyst Fund, Delek Motors, Dr. Boaz Schwartz, Novelis, Magna International, JX Nippon Mining & Metals, and Union Tech Ventures.
- Prologue, a holding company of technology investments and leading media brands, raised $23 million from a16z and Sequoia Capital.
- Electric Sheep Robotics, a San Anselmo, Calif.-based lawn mowing robotics technology company, raised $21.5 million in Series A funding led by Tiger Global.
- Otta, a London-based online job portal, raised $20 million in Series A funding led by Tiger Global Management and was joined by investors including LocalGlobe and Founder Collective.
- CloudApp, a San Francisco-based visual work communication tool, raised $9.3 million in Series A funding. Grayhawk Capital and Nordic Eye led the round and were joined by investors including Kickstart Fund, Cervin Ventures, New Ground Ventures, Bloomberg Beta, Peninsula Ventures, and Forward VC.
- Vajro, an Irving, Tex.-based mobile app developer, raised $8.5 million in Series A funding from Five Elms Capital.
- Archive, a Portola Valley, Calif.-based resale technology company that builds customized marketplaces for brands for second hand sales, raised $8 million in funding. Lightspeed Venture Partners and Bain Capital Ventures led the round and were joined by investors including Firstmark; Alex Bolen, CEO of Oscar de la Renta; Shan Lyn-Ma, co-founder of Zola; and Dawn Dobras, former CEO of Credo Beauty.
- Aver, a decentralized peer-to-peer betting exchange built on the Solana blockchain, raised $7.5 million in seed funding led by Jump Crypto and was joined by investors including Mirana Ventures, Susquehanna International Group, Genesis Block Ventures, Serum Ventures, Blue Pool Capital, MEXC, Gate.io, Petrock Capital, and Solar Eco Fund.
- Checkbox, a Sydney, Australia-based no-code process automation platform, raised $4.5 million in pre-Series A funding led by Sequoia India’s Surge and Tidal Ventures.
- dNovo, a San Jose, Calif.-based hair stem cell technology company developing a cure for hair loss, raised $2.7 million in seed funding from Y Combinator, Felicis Ventures, Soma Capital, and Yintai Investment Company.
PRIVATE EQUITY
- New Mountain Capital agreed to acquire the 3E business of Verisk, a global data analytics provider, for approximately $950 million.
- Marlin Equity Partners acquired a $150 million minority stake in Reputation, a San Ramon, Calif.-based Reputation Experience Management (RXM) company.
- Brighton Park Capital acquired a $140 million stake in HTEC Group, a San Francisco-based global consulting, software engineering and digital product development company.
- Spectrum Equity and TransUnion invested $45 million in SavvyMoney, a Pleasanton, Calif.-based credit score platform developer. Financial terms were not disclosed.
- Vista Equity Partners acquired a $70 million majority stake in Jebbit, a Boston, Mass.-based zero-party data platform.
- AccuWeather acquired Plume Labs, a Paris, France-based environmental technology company. Financial terms were not disclosed.
- CIVC Partners acquired a majority stake in Innovate MR, a tech-enabled survey and sampling service provider for market research agencies, consulting firms, and corporations. Financial terms were not disclosed.
- Recognize acquired AST Corporation, a Lisle, Ill.-based cloud and digital transformation solutions provider. Financial terms were not disclosed.
EXITS
- Savvy Gaming Group agreed to acquire ESL Gaming, a Cologne, Germany-based online gaming portal, from Modern Times Group for approximately $960 million in cash. As part of the deal, ESL Gaming will merge with FACEIT.
OTHER
- Boeing invested $450 million in Wisk Aero, a Mountain View, California-based self flying taxi services company. Boeing and Kitty Hawk own the firm.
IPOS
- SHEIN, a Chinese fashion retailer, is weighing an IPO in the U.S. again, per Reuters.
- Eleison Pharmaceuticals, a Princeton, N.J.-based late-stage therapy developer for rare, life-threatening diseases, filed for an IPO. The company reported a net loss of $5.8 million for the year ending in 2020 and has yet to post product-related revenue.
SPAC
- BitFuFu, a digital asset cloud mining service provider, agreed to go public via a merger with Arisz Acquisition Corp., a SPAC. As part of the deal, Bitmain Technologies and Antpool Technologies led a $70 million PIPE investment in the company. A deal values BitFuFu at approximately $1.5 billion.
FUNDS + FUNDS OF FUNDS
- Chimera Capital, an Abu Dhabi, UAE-based private investment firm, raised $10 billion for a second fund focused on growth equity investments in fintech, AI, life sciences, consumer internet, and B2B sectors.
PEOPLE
- Aurora Capital Partners, a Los Angeles-based private equity firm, promoted Scott Erickson to partner, Phil Gross to principal and Jordan Leibowitz to vice president.
- a16z, a Menlo Park Calif.-based venture capital firm, hired Sriram Krishnan as general partner. Formerly, he was with Twitter and Snap.
- Brick & Mortar Ventures, a San Francisco-based venture capital firm, promoted Alice Leung to vice president and Austin Yount to principal.
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