Tech ‘unicorn’ IPOs are booming

Highly-valued tech startups are going public at a pace not seen
in three years.

Four so-called “unicorns,” or private companies valued at $1
billion or higher, completed initial public offerings in the
second quarter. That was double what was seen in the first
quarter, and equal to the number of unicorn IPOs for the entire
year in both 2015 and 2016, according to data compiled by Goldman
Sachs.



The
four unicorn IPOs in the 2nd quarter were double what was seen in
the 1st quarter, and equal to the full-year total for both 2015
and 2016.

Goldman
Sachs


These IPOs have seen mixed success. Here’s a breakdown of the
four former unicorns that made it to market in the second
quarter, with all valuation data from Goldman:

  • Okta
    — Completed IPO in April, valued at $1.8 billion, above its
    last funding round, which put it at $1.2 billion

    • Stock has surged 42% since pricing
  • Cloudera
    Completed IPO in April, valued at $1.9 billion, well
    below its last funding round, which implied a $4.1 billion
    valuation

    • Stock has climbed 19% since pricing
  • Delivery
    Hero
    — Completed IPO in June, valued at €4.4
    billion, above its last rounding round, which put it at €3.1
    billion

    • Stock has risen 6.6% since pricing
  • Blue
    Apron
    — Completed IPO in June, valued at $1.9
    billion, slightly below its last funding round, which implied a
    $2 billion valuation

    • Stock has plummeted 46% since pricing

It’s worth noting that while Blue Apron’s final valuation doesn’t
look particularly weak relative to its last private funding
round, the company had a hellacious time going public.

In the weeks leading up to Blue Apron’s final pricing, retail
juggernaut Amazon
shelled out $13.7 billion to buy Whole Foods, which caused
potential investors to consider the possibility of more
competition in the food-delivery industry. As a result, Blue
Apron took a cleaver to its IPO range, cutting it to $10 to $11 a
share, down from $15 to $17. The company ultimately
priced at $10 a share
— 40% below the maximum it had sought.

The ordeal serves as a cautionary tale for other unicorns which
may be considering a public offering. It shows that industries of
all types can prove fickle to external pressures, and stresses
just how important it is for companies to exercise caution when
trying to time their IPOs.

So what’s next for the growing unicorn universe? After all, 13
new ones emerged during the second quarter, more than offsetting
the four that went public. There are now 168 unicorns out there.

The biggest single funding round for a software and internet
company in the second quarter was a
$400 million Series E
for Houzz, a popular photo site used by
homeowners to plan renovations. Other companies receiving
considerable late-stage funding included Peloton ($325 million)
and AvidXchange ($300 million), according to Goldman.

The number of unicorns has either increased or stayed flat in
ever quarter since the start of 2014, the firm’s data show.
Here’s a look at their trend over time:


Screen Shot 2017 08 15 at 9.54.00 AM
The
number of unicorns has increased or remained flat in each quarter
since the start of 2014.

Goldman
Sachs


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