[co-author: Carlos Juarez]
CB Insights recently published its seventh annual Tech IPO Pipeline Report. The report notes that in 2013, the median time between first funding and IPO for U.S. VC-backed tech companies was 6.9 years compared to 10.1 years for tech companies that went public in 2018. As we have noted in previous posts, tech companies continue to raise more significant amounts of funding prior to undertaking their IPOs. In 2018, tech companies raised, on average, $239 million before undertaking their IPOs, which is almost 1.4x the amount raised in 2017, and over 3.7x as much as 2012 figures.
The number of new private tech unicorns has outpaced the number of tech IPOs in 2018. After 2014, tech IPOs declined significantly and have remained at those depressed levels, with only 19 tech IPOs in 2018. By contrast, there were 45 tech companies that became unicorns in 2018. The mega-round financing trend, wherein companies raise over $100 million per round, was also prevalent in the tech-sector, with almost 120 mega-round financings completed in 2018.
Tech-focused private equity firms continue to acquire majority stakes in tech companies that are nearing liquidity opportunities, whether IPOs or M&A exits. However, M&A exits continue to replace IPOs. The report cites as examples Qualtric, Adaptive Insights, and AppNexus.
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