October 7, 2015 at 20:23Inflating startups with money in the early stages can lead to the collapse of the IPO market
Recently, technology companies have been developing at an incredible pace. They can increase the number of users to 100 million faster than ever. And this figure is one of the key indicators of the development of such companies.
“Technology companies scale up and grow in valuation much faster and in the earlier stages of the life cycle than ever before,” says Dan Deese of Goldman Sachs .
In such conditions, investment banks are forced to change their approach to working with technology companies.
Now companies need their services in the early rounds of financing. Although in the past they were required only at the IPO stage. Now the technology company can well afford to remain private, entering the world market.
And here is the corporationMicrosoft only started working with Goldman Sachs before its 1986 IPO, cites Dan Diz, a counterexample.
David Wow of Credit Suisse agrees that the time taken for companies to gain 100 million users has been significantly reduced.
The formation of a company’s valuation often occurs long before it becomes public. Wow mentions Google and Amazon , as an example of the former scheme - the growth of valuation after an IPO. And Alibaba holding is an example of a new development scheme. By the time it entered the 2014 IPO, the holding was already valued at approximately $ 160 billion.
The global IPO market this year fell to $ 32.72 billion. Last year, its volume reached $ 80.86 billion.
According to Wow, it is an early increase in the valuation of technology companies that is the main reason for their pumping money at the initial stages of development, reports Business Insider. Therefore, modern private companies do not seek to become public. They already have enough funds for development.
In addition, given the unstable situation on the exchanges, an IPO for the company is a bold but risky step. As practice has shown, in such periods, many startups with an estimate of more than $ 1 billion do not dare to switch to public status. According to Dealogic, since the beginning of this year, only 19 companies in the United States have conducted IPOs. Last year, over the same period of time, 41 companies became public. However, Pure Storage and Squareare exceptions. Both are getting ready for an IPO this year.
On September 26, Megamind wrote that the Australian IT company Atlassian, the developer of the legendary task manager JIRA, also plans to enter the IPO by the end of the year .
“Technology companies scale up and grow in valuation much faster and in the earlier stages of the life cycle than ever before,” says Dan Deese of Goldman Sachs .
In such conditions, investment banks are forced to change their approach to working with technology companies.
Now companies need their services in the early rounds of financing. Although in the past they were required only at the IPO stage. Now the technology company can well afford to remain private, entering the world market.
And here is the corporationMicrosoft only started working with Goldman Sachs before its 1986 IPO, cites Dan Diz, a counterexample.
David Wow of Credit Suisse agrees that the time taken for companies to gain 100 million users has been significantly reduced.
The formation of a company’s valuation often occurs long before it becomes public. Wow mentions Google and Amazon , as an example of the former scheme - the growth of valuation after an IPO. And Alibaba holding is an example of a new development scheme. By the time it entered the 2014 IPO, the holding was already valued at approximately $ 160 billion.
The global IPO market this year fell to $ 32.72 billion. Last year, its volume reached $ 80.86 billion.
According to Wow, it is an early increase in the valuation of technology companies that is the main reason for their pumping money at the initial stages of development, reports Business Insider. Therefore, modern private companies do not seek to become public. They already have enough funds for development.
In addition, given the unstable situation on the exchanges, an IPO for the company is a bold but risky step. As practice has shown, in such periods, many startups with an estimate of more than $ 1 billion do not dare to switch to public status. According to Dealogic, since the beginning of this year, only 19 companies in the United States have conducted IPOs. Last year, over the same period of time, 41 companies became public. However, Pure Storage and Squareare exceptions. Both are getting ready for an IPO this year.
On September 26, Megamind wrote that the Australian IT company Atlassian, the developer of the legendary task manager JIRA, also plans to enter the IPO by the end of the year .