PitchBook News - What now for IPOs?

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The Research Pitch

October 28, 2023

Presented by Corporate Finance Institute

Featured credit research: Each week, we make one full report from our LCD team available to non-clients. You can get access to our US High-Yield Bond Weekly Wrap here.

GenAI + Infosec? VC dealmaking in information security has remained flat, but generative AI may be able to charge up the stagnant vertical. Non-clients can access a preview of our new Information Security Report.

Trending research: Here are some of our most popular analyst notes over the past month or so:

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IPO market chills again after summer's valuation thaw

The IPO market has developed a layer of frost as investors dump tech stocks and higher interest rates compress valuations—the Nasdaq is down 12% from its July peak.

Valuations rose in the spring and summer and VCs awakened their portfolio companies to pursue public listings. But the summer's exuberance has faded. 2021's elevated legacy valuations and lower public markets now mean investors can't get the exit valuations they'd want.

Aggravating things, revenue growth is likely slowing at many private tech firms, as virtually all public SaaS companies are experiencing decelerations. We believe only a small cohort of private tech companies are meeting and beating revenue growth expectations.

As a result, many VC-backed companies will hibernate in the private markets until valuations improve, companies grow into their valuations, and/or late-stage VCs accept losses and push portfolio companies to break the ice and go public.

Key things to watch are inflation and interest rates, which, I think, could decline earlier than many expect. If that happens, investors could easily boost equity valuations.

In our first IPO Navigator, our team of industry and tech analysts review stock performance, valuations, and cap tables for recently IPO'd companies:

Download the free report

Thanks,

James Ulan
Lead Analyst, Emerging Technology

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Market Updates

M&A deal value nearly hit a 10-year low in the third quarter, but market conditions are pointing to a recovery next year.

Trillions of dollars in dry powder for PE sponsors and cash piles kept on hand by corporations are positioned for deals.

In addition, lower valuations may spur public strategic buyers to scoop up private targets.

Our Global M&A Report breaks down the trends shaping dealmaking and explores the indicators for a revival:

read the free report

Thematic Research

Integrating Digital Assets and Crypto Into Traditional Finance

Despite crypto's struggles, traditional financial institutions are still embracing a future that leverages digital assets.

Firms are beginning to adopt blockchain and other technologies to improve operations and provide crypto services for institutional investors.

Our research lays out the future of a traditional finance network more integrated with digital assets:

read the free research

Webinars & Events

A pair of webinars for you over the next few weeks:

Nov. 9: When might we begin to see a recovery in US VC dealmaking and exit activity? Our panel of professionals will discuss key findings from the Q3 PitchBook-NVCA Venture Monitor. Register here.

Nov. 16: Net-asset-value loans have emerged as a solution to support portfolio company liquidity through turbulent conditions. We're hosting a discussion on the benefits and drawbacks of NAV loans from both the GP and LP perspectives. Register here.

Commentary

Senior tech analyst Brendan Burke weighs in on the news that IronNet has shuttered its operations and filed for bankruptcy protection:

"IronNet participated in the network detection & response (NDR) category of infosec, which we believe faces lower prioritization from customers relative to secure networking and endpoint detection & response.

"The company did a SPAC merger to go public in 2021 while maintaining a high burn rate. The company's revenue declined in 2022 and remained low growth in 2023.

"While many growth-stage companies are struggling to achieve revenue growth expectations in the current economic environment, other NDR leaders such as Darktrace, ExtraHop, and Vectra have also not reached the scale of leading endpoint and network security vendors.

"Network traffic has become an important input to extended detection and response (XDR) platforms offered by market leaders such as Palo Alto Networks and CrowdStrike yet is not the primary medium of cyberthreats, given the prevalence of cloud and identity attacks.

"Companies that only focus on one type of traffic face competitive risk from consolidated platform vendors."

Brendan Burke

Senior Emerging Technology Analyst
Information Security

In the News

Our insights and data featured in the press:

A ranking of global VC ecosystems reveals the Detroit metro area as an emerging hub. [WSJ]

Why the math might not add up on General Catalyst's ambitious hospital bet. [Axios Pro]

Tech startup financing is falling in the UK, like everywhere else. But the healthcare services & devices sector has shown the "most resilience." [Bloomberg]

Defense tech funding slumped slightly last year, but new rounds for Shield AI and Anduril would lift this year's numbers. [The Information]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

ICYMI

More of our recent research:

Market updates

Thematic research

Industry & tech research

Foodtech Overview
Emerging Space Brief: Fusion Energy

Credit research

Coming next week (subject to change)

Global Markets Snapshot: October
Healthcare Services Overview
Enterprise Fintech Report
Carbon & Emissions Tech Report
The Seed Blip

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PitchBook News - What now for IPOs?

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