Although not quite at dot com boom levels, the U.S. is seeing the most venture-backed IPOs since the tech bubble. Fifty-five companies with venture financing have priced this year, the most seen in the same period since 2000, when there were 148, according to Dealogic.
The venture-backed IPOs have also performed well. The average first-day-pop for a venture-backed IPO this year has been 20.8%, whereas the rest of the IPOs averaged a 9.2% rise. This is, however, nowhere near the sky-high valuations seen in 2000, when venture-backed IPOs saw a 61.1% rise on the first day of trading.
The typically-venture-backed sectors are the same ones that have seen the most IPO activity. There have been 34 biotech and pharma offerings and 26 technology pricings.
The overall IPO market has been robust with 123 IPOs raising $26.8 billion -- the most IPOs since 2000, when there were 201 in the same period.
“The environment for IPOs has been very strong,” Scott Cutler, executive vice president and head of global listings at the New York Stock Exchange, said. The number of IPOs is largely because of the “underlying economy that’s doing pretty well.”
There was a short-term setback, however, as many of the offerings in April and May priced below range or saw their shares fall on the first day.
Cutler says there’s a “bit of a valuation reset that’s going on in the market right now.” In particular, “a lot of the growth oriented companies that were in areas where profitability was not near,” suggesting that investors are starting to pay more attention to financials.
Going forward, “we are looking at a pretty strong June,” Cutler predicts. Eight companies are supposed to go public next week.
Of the 123 companies to IPO in the United States this year, 73 have listed on the Nasdaq and 48 have listed on the New York Stock Exchange. Nasdaq IPOs raised a total of $9 billion and NYSE IPOs have raised $17.6 billion.
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