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Which Startup Is Next in Line for an IPO?
It’s difficult to predict which billion-dollar startup will go public next. One way to narrow it down, though, is to examine exactly how long venture capitalists are taking to exit their investments—and which notable unicorns may be ripe for an IPO.
One of the most notable trends among VC-backed companies is that the median time to IPO has risen dramatically over the last decade, from 4.9 years in 2006 to 8.3 years in 2016, per PitchBook data. The same hasn’t held true for acquisitions—the median time to exit in both 2006 and 2016 via that route was 4.9 years, with little variance in the intervening 10 years.
Here’s a closer look at the data over the last decade (North American and European companies):
Median time from first VC round to exit (years)
It’s true that venture-backed companies are taking an exceptionally long time to go public; there’s a stable of startups that have been around for nearly a decade (more, in the case of Qualtrics) but have yet to IPO. A notable exception is Blue Apron, set to make its debut next week. The provider of a meal kit subscription service was founded in 2012, putting it closer to the IPO timeline seen in 2006.
Below are several well-known companies that are at least seven years old and have yet to exit. All have been subject to IPO rumors, but they seem to be part of the general trend toward delaying public offerings in favor of raising significant funding and increasing cash runways.
Here’s some information on select companies with IPO potential:
Of those companies, Dropbox may be the closest to actually going public. The 10-year-old company last raised equity funding in 2014, but reportedly secured a $600 million credit line in March, which may suggest it’s considering an IPO in the not-so-distant future. The company could opt to tap into the credit line, or leave it alone and hit the public markets.
And if we’re thinking in terms of timing exclusively, Uber is due to go public very soon. It was founded eight years ago, and the median time to IPO is sitting at 8.3 years. Maybe now that Travis Kalanick is officially out as CEO and the company seems to be serious about overhauling its culture and business practices, it can begin concentrating on its exit strategy.
Article by Dana Olsen, PitchBook
This article was originally published in ValueWalk.
Photo: Jun OHWADA