Venture business trends: IPO as a “downgrade”

    Venture capitalists are increasingly talking about IPOs as a kind of “lowering round” of financing. Indeed, immediately after an IPO, or after some time, the assessment of startups often falls and is much lower than in private rounds. This has happened with companies such as Square , Facebook , Groupon and Zynga .

    According to the IPO, Square processing company received a valuation of $ 2.9 billion. This is more than half the October estimate. The price per share fell below the minimum mark of $ 11 and amounted to $ 9. The company put up for sale $ 243 million of securities. This is 25% less than the declared amount ($ 324 million). "Megamind" wrotethat in October Square was valued at $ 6 billion.

    In December 2011, mobile game developer Zynga launched a public offering for $ 10 per share. However, on the first day, the price dropped to $ 9.50. Six months later, she fell to $ 3 per paper. Since then, the company's valuation has declined by 73.16%.

    In 2011, Groupon also launched an IPO website for discounts and coupons. The beginning was promising - the company's quotes increased by 50% and reached $ 20 per share. But shortly after the placement, investors had many questions about the company's profitability and its prospects. Shares fell $ 6.32. Further, the decline continued and reached 89.7% in August 2015. But before the IPO, Google offered to buy Groupon for $ 6 billion.

    At some stage, these companies were reevaluated, and after the IPO they were simply returned from heaven to earth. In connection with what is happening, many analysts do not miss the opportunity to recall the phrase “dot-com bubble” that is pretty tired of the edge. That is, now, if a company gains a reputation not just as a “bubble”, but as a bubble that is about to burst, public and then private investors “turn away” from it.

    A number of experts associate the phenomenon of the “lowering round” with the unstable economic situation in the world, with the volatility of stock markets, with the dollar, and someone calls such failures temporary “anomalies”.

    However, some experts believe that the gap between the assessments before and after the IPO is not so fatal in the long run, reportsTechCrunch. Facebook at one time also passed the "test of publicity." Then, in May 2012, the company made a number of miscalculations during the placement, and the price per share fell significantly below expectations. After that, Facebook restored its reputation for a year. However, now, after three years, the company's valuation has grown by more than five times.

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