Are IPOs Eating the World?
2019 is reportedly the year of well anticipated tech IPOs.
Is this a resurge of what used to be the norm, or just a timing coincidence? Are IPOs a way for scaling up tech companies or just an exit for investors?
To address these questions we analyzed the funding path of over 40 thousand tech scaleups across US, Europe, China, and Israel.
Our answer is blatantly obvious: the startup world is (still) mostly venture capital driven, since less than 2% of tech scaleups went through an IPO, and only 10% of the overall capital fueling tech scaleups came from the stock markets. Tech companies seem not to factor the IPO while designing their capital raising strategy. Whether this is due to a culture gap (you know, people, including entrepreneurs, mostly follow already traced pathways that currently do not include IPOs) or requirement barriers (stock markets are not welcoming enough for emerging tech startups as they are for traditional mid-size companies), it remains a good topic to be discussed.
On the other hand, going public seems to pay off.
Our data show that listed scaleups raise an amount of capital that is 5.5 times higher than the companies that follow an exclusive venture capital path.
And, ultimately, IPOs are the way to sit atop the Iron Throne. One out of three of all Super Scalers (companies raising over $1B) are public companies.
Most importantly, the startup ecosystem needs the stock exchanges to play a more comprehensive role in startup funding, specifically later stage financing. The programs launched by some stock exchanges such as ELITE by the London Stock Exchange and TechShare by Euronext are initial steps in this direction.
On our side, we started migrating our Scaleup Summit matchmaking format to the stock exchanges around the world (LSE, TASE, Börse Stuttgart, Nasdaq, Madrid Stock Exchange, etc…) to address that very problem: to facilitate a better bridging between tech companies and stock exchanges.
There is definitely a market need for that.
And a big upside for both parties: scaleups and stock markets.
Alberto Onetti Chairman, Mind the Bridge
Marco Marinucci CEO, Mind the Bridge