Hello friends! Axel from Gilion here.
Tech IPO Market on the rise (again)?
This week, as anyone in tech will tell you, all eyes are on Reddit, which went public yesterday. What initially looked like a tough sell for markets ended up being 4-5x oversubscribed and the price rising by 48% to value the company at close to $10bn. To me this is rather big news. We did see a number of large IPOs last year for companies in or adjacent to AI and other hot industries, like British chip designer ARM, but otherwise the IPO window for traditional tech companies has been pretty much closed.
For the non-indoctrinated, Reddit is the world’s largest moderated internet community, spawning everything from discussion on global politics to 320 000 people helping each other determine what their cookie cutter shapes represent. Reddit has been hard at work pitching themselves as an AI-company, by i.a. Entering deals to help train AI models on its data. (Perhaps a risky strategy based on the latest AI-washing settlements from the SEC).
Fundamentally though, it’s something as currently unsexy as a consumer focused social network. The fact that they are still likely to complete a multi-billion dollar IPO might be a sign of things to come in an IPO market that has been all but closed to Tech Companies as of late. If we factor in other high profile tech IPOs like Klarna we might be on the verge of a tech IPO boom. If IPOs do indeed emerge as a viable path for tech companies once again, this is significant for several reasons:
IPO: Shedding Light on Scaleup Metrics
With almost all startup transactions happening off public markets few details around their core metrics and valuations are shared. If we start seeing more scaleups IPO it will also make benchmark driven valuations a lot more attainable, since public companies by definition need to share a lot more data about their business.From Stock Options to Startup Diversity One of the key reasons to go public is to free up liquidity for investors in a company. This can also happen at VC-rounds or trade sales, but an IPO typically means a very large number of shareholders in a company can sell all their stock and options. This in turn can have multiple positive echo system effects:
1. It frees up cash that can be reinvested into other startups. For instance the Spotify IPO created tons of new business angels who have helped cement Sweden as a tech hotpot.
2. With employee stock options typically paying out at IPO they are no longer financially tied to a company, and talent spreads across the industry.
3. If IPOs are considered likelier earlier in a startups journey, the perceived risk of joining or starting one goes down, hopefully attracting a more diverse set of founders and employees.
IPO: Shedding Light on Scaleup Metrics
As you might know by now, I am pretty passionate about creating alternative ways of funding companies. Although IPO criteria might seem strikingly similar to those of late stage VC investing it adds another layer of investor preferences and hence yet one more route for founders to fund their companies growth journeys.
Insights from Gilion’s VC Mapping
Recently, we rolled out our updated VC Mapping for 2024., and the response has been absolutely mind-boggling So, we're thrilled to share some intriguing new insights with you.
Local over Global
Getting the biggest and baddest VCs on your cap table has historically been the ultimate goal of any self respecting startup founder. A badge of honor synonymous with big tickets, influential networks, and of course bragging rights.
But in 2024, we can see a clear trend shift in the use of our VC database, towards founders primarily looking in their own backyard for their perfect VC match. This trend holds true in the Nordics, Germany as well as the UK. There can of course be a myriad of reasons for this. From ticket sizes becoming smaller and international players pulling back, to difficult times nudging founders to put more emphasis on finding VCs with the bespoke expertise needed for their venture. Either way, it would mark a very interesting development in the VC space if it persists.
In the venture capital world, certain sectors draw significant investment and market attention. Wondering about the top picks in 2024? Here's the latest data from our mapping, with the most searched for fund categories being:
1. Fintech
2. SaaS
3. AI & Machine Learning
4. Software
5. Consumer
One last thing before we go.
Gilion scores #1 on Product Hunt
Gilion scores #1 on Product Hunt This week, Gilion launched the 2.0 version of our platform on Product Hunt, and ended up snagging not third, or second, but first place as Product of the day. Even though we were fighting for that spot with companies like NVIDIA launching the same day, we want to say a massive thank you all for supporting the new release of our platform.
Stay tuned for more updates as we navigate these market trends together. And if there's a specific topic you'd like us to dive into, don't hesitate to speak up!
/Axel
