After one other slow year in 2024 for latest technology listings, IPO markets are expected to speed up in 2025.
A year ago, the prospects weren’t optimistic. What has modified?
“I think there is a lot of confidence in the market. Stock markets are trading at all-time highs,” he said Ran Ben-Tzur legal advice office Fenwick and West. “There has been a return to a focus on growth, which is obviously great for technology.”
Fast-growing technology firms that were expected to go public in 2022 – before the stock market corrected – now have three years to administer costs and grow their businesses.
“We are already far enough away from the market shock we experienced a few years ago,” Ben-Tzur said. “There was a lot of uncertainty around valuations, which is not conducive to IPOs or M&A. I think now people know what their valuations are. They have more clarity on this.”
Highly placed entries
“Building on success ServiceTitan IPO and several other companies in 2024 expect a wider opening of the IPO window in 2025.” – he said Nina Achadjianpartner in Index venturesvia email, who led Index’s investment in ServiceTitan and sits on the board of the software company, which went public on December 12.
“In 2025, we should see companies begin testing public markets across all sectors – fintech, cyber, AI and SaaS, among others,” Achadjian said.
Among the largest startups widely perceived as IPO candidates are Swedish firms Klarnaa well-known “buy now, pay later” supplier who confidentially submitted an application for a public offering in the company KNOT. The company was most recently valued at $6.7 billion in July 2022 financing, a reduction of $39 billion from the previous valuation.
The next likely IPO in 2025 is Cerebras Systemsan AI chip company that filed in September. It was last valued at just over $4 billion in November 2021.
“We will start to see momentum at the beginning of the year, and as the year goes on we will really accelerate,” predicted Ben-Tzur, who saw early momentum in 2024 that then faded.
Looking back
Crunchbase tracks the IPOs of the largest U.S. firms on its Billion Dollar Removals dashboard. Nine such enterprise capital firms went public with valuations exceeding $1 billion in 2024 – with ServiceTitan being the most up-to-date – in comparison with 10, including 4 SPACs, in 2023. These numbers are well below historical norms.
The highest quotations in 2024 concerned various sectors and largely remained at this level. Biotech landed two firms, and the rest were in very different technology sectors, from social media to semiconductors and cybersecurity to autonomous driving.
Astera’s laboratory AND Redditeach listed in March, were the best-performing latest stocks this year. Except for these two firms and Ancestral logisticsshares of other larger 2024 tech IPOs are trading at or barely below IPO value as of December 16, 2024.
Unlocked value
While many firms have delayed their IPOs over the past three years, for most, the ultimate goal is still to go public.
“There is an incredible amount of unrealized value that can be unlocked by going public, and I expect that the small handful of venture-backed companies that hit IPO markets in 2024 will serve as leaders for private companies that might otherwise wait for “perfect” market conditions, Achadjian said.
Ben-Tzur agreed: “For many of our clients, being public is a tailwind for business. This only increases the company’s prestige. This makes the company much more credible.”
It is also easier for a public company to take over other firms and raise capital, he said.
ServiceTitan pops up
ServiceTitan opened 42% above its IPO price in its December public debut – a good sign for public markets heading into 2024.
“There was pop that people weren’t expecting,” he said Peter Walkerhead of research at a startup capital management platform Card.
A software provider for home service firms has published ServiceTitan Second quarter revenues were $192.99 million — up 23.7% year over year with decreasing losses of $35.65 million.
ServiceTitan is not an artificial intelligence brand or company, and its customers are inclined to be small businesses reasonably than larger enterprises, Ben-Tzur noted. “It’s a good barometer for companies that are not necessarily the largest private companies,” he said.
Achadjian said firms with strong fundamentals will do well even in a less-than-perfect market. “Even in difficult economic cycles, companies with strong unit economics, strong TAM and accurate knowledge of their customers’ needs will succeed in public markets,” she said.