2017 might be a breakthrough year for tech IPOs

31 Jan 2017

Time Square with Nasdaq feed. Image: Lucky-photographer/Shutterstock

With Snap’s IPO just around the corner, all indications are that 2017 will be a breakthrough year for tech IPOs.

While tech exits dropped in 2016, the number of tech initial public offerings (IPOs) doubled in the second half of the year, indicating that 2017 will be a pivotal year for IPOs.

Total tech exits for 2016 were down by 4pc to 3,260, according to CB Insights, while IPOs returned to fashion with 98 IPOs worldwide.

Big IPOs of 2016 included Nutanix ($2.2bn), NantHealth ($1.7bn) and Twilio ($1.2bn).

CB Insights said there were 18 exits valued at over $1bn in 2016, including the Dollar Shave Club, Cruise Automation and Jet.

This was ahead of the 2015 picture, where there were 12 exits worth more than $1bn.

2017 will be a breakthrough year for tech IPOs

Most active tech acquirers in 2016. Image: CB Insights

Overall, the number of unicorn births declined in 2016; just 25 companies gained valuations more than $1bn – a 68pc decline year-over-year.

Google was the most active acquirer in 2016, with tech acquisitions including Eyefluence and API.AI, among several others. Salesforce and Accenture tied for the number two spot followed by J2 Global, which bought companies Offers.com and Web24.

Intel Capital saw the most tech exits among all corporates and corporate venture investors. These exits included IControl Networks, Impinj and Nexmo.

The tech IPO pipeline for 2017

2017 will be a breakthrough year for tech IPOs

Top five IPO prospects. Image: CB Insights

In its Tech IPO Pipeline report for 2017, CB Insights looked at 369 private-equity-backed tech firms in the US valued at over $100m.

Among them, the companies have raised $86.2bn in equity financing, with an average of $262m raised each.

The majority of the companies – 205 of them – are based in California.

Companies being monitored include Snap, Vice, Qualtrics, Datadog, Cloudflare, AppDynamics and App Annie, to name a few.

The list also includes Stripe, the online payments service founded by Irish brothers John and Patrick Collison, which has raised $690m from investors, including Andreessen Horowitz, Lowercase Capital and Sequoia Capital. The company was recently valued at $9bn.

Companies tipped to go public in 2017 include Pluralsight, Okta, Blue Apron and Zuora.

The list of 2017 Tech IPO Pipeline players also includes companies with an Irish base such as Airbnb, Unity, Glassdoor and Slack.

Venture capital player Andreessen Horowitz has the most of these companies valued at $1bn and more, with 17 in total. It was an early-stage investor in 18pc of them, including Stripe.

Time Square with Nasdaq feed. Image: Lucky-photographer/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years