Technology start-up companies are choosing to remain private for longer, creating a pipeline of high-value listings expected this year.
The median age of venture capital-backed technology companies at the time of an IPO has risen to 10.9 years in 2018 from 7.9 years in 2006, according to research from financial data firm Pitchbook. It means that when the firms do launch an IPO, they have a higher valuation.
‘Driven by boosted allocations toward private equity and venture capital investors, capital available to technology start-ups has increased significantly in recent years, allowing them to stay private for longer,’ the report notes. ‘This has created a backlog of potential IPOs, especially unicorns, positioning many current investors to realize returns as these companies plan to go public in 2019 and 2020.’
The research comes as ride-hailing apps Uber and Lyft, which are 10 and seven years old, respectively, prepare to go public this year.
Uber could be valued in the range of $76 bn-$120 bn, Pitchbook says, making it one of the largest IPOs ever. Lyft, which operates only within the US, could hit between $20 bn and $25 bn in valuation.
Other Silicon Valley start-ups such as Airbnb and Slack are considering forgoing Wall Street and listing directly to the public, similar to Spotify’s record-setting $26.5 bn direct float last year.
