Initial public offerings are back in Silicon Valley amid the pandemic, after a fashion
THE IPO is dead, long live the IPO. When the pandemic hit in March, initial public offerings, particularly those by technology startups, were predicted to be among the early victims. After all, who wants to go public in a once-in-a-century crisis?
Quite a few people, it turns out. In the past couple of months ipos, which all but dried up until late May, have come back with a vengeance in America. None of Silicon Valley’s recent and upcoming listings rivals that of Ant Group. The payments affiliate of Alibaba, an online giant, wants to raise a record $30bn in China by October, which could value the firm at around $200bn. But America’s technology startups have brought in $10bn so far this year (see chart 1)—and there is more to come. On August 19th Airbnb, which rents homes to travellers, filed for an ipo. Other privately held “unicorns” reportedly ready for public pastures include Snowflake Computing, which makes cloud software; DoorDash, which delivers food; and Instacart, which delivers groceries. Add Palantir, a cryptic data-management firm preparing for a direct sale of existing shares in public markets, and the latest combined valuation of these five is $80bn, according to PitchBook, a data provider. Even if they float only a portion of their shares, billions-worth of fresh tech stocks will soon trade publicly.
This flurry of activity has not reached dotcom-bubble territory from the turn of the century, when dozens of startups floated each month. But there is a whiff of “irrational exuberance” in the air, detects Lise Buyer, who has watched technology stocks since the heady late 1990s and now helps startups with IPOs at Class V Group, an advisory firm. When Duck Creek, an insurance-tech company, went public on August 14th, it closed nearly 50% higher. BigCommerce, an online-shopping platform which floated a week earlier, saw its shares “pop” by more than 200%.
这波热潮尚未达到世纪之交时互联网泡沫的那种程度，当时每个月都有几十家创业公司上市。但丽丝·拜尔（Lise Buyer）已经嗅到了一丝“非理性繁荣”的气息。她从上世纪90年代末的狂热时期开始关注科技股，目前在咨询公司Class V Group帮助创业公司上市。保险科技公司Duck Creek在8月14日上市时，当天收盘上涨近50%。而比它早一周上市的网购平台BigCommerce股价暴涨超过200%。
With the S&P 500 index of big American firms at an all-time high, never mind that covid-19 rages on, investors’ rationality is certainly up for debate. But for many startups, the desire to go public is perfectly rational, for two reasons.
The first has to do with the financial markets themselves. Venture capitalists who had been pouring billions into unlisted firms began to cool on frothy startups before the pandemic, after a few unicorn listings disappointed (Lyft and Uber) or collapsed (WeWork). At the same time, rock-bottom interest rates are pushing public capital to seek returns. As a result, stockmarket investors are ready to accept high valuations, says Lauren Cummings of Morgan Stanley, an investment bank and a leading underwriter of IPOs. “There is insatiable demand by public investors,” agrees Brian Feinstein of Bessemer Venture Partners, a venture-capital (VC) firm.
第一个原因关乎金融市场本身。疫情爆发前，已对未上市公司砸下巨资的风险资本在几家独角兽上市表现惨淡（Lyft和优步）或失败（WeWork）之后对充满泡沫的创业公司热情降温。与此同时，利率已降至谷底，促使公共资本寻求回报。投资银行、IPO主要承销商摩根士丹利的劳伦·卡明斯（Lauren Cummings）表示，在这种情况下股市投资者愿意接受高估值。风投公司柏尚投资（Bessemer Venture Partners）的布莱恩·范斯坦（Brian Feinstein）表示认同，“公众投资者表现出了难以满足的需求。”
Startups are keen to slake it before it dissipates. Many firms are therefore dusting off listing plans that were put on hold in the wake of the ride-hailing duds and the WeWork snafu. Their case is bolstered because—and this is the second reason for startups’ listing-lust—the pandemic has been a boon for many tech firms.
The five big platforms—Alphabet’s Google, Amazon, Apple, Facebook and Microsoft—have thrived as self-isolating consumers spend more time and money online, and firms splash out on cloud-computing services to enable remote working. On August 19th Apple briefly touched a market capitalisation of $2trn, the first American company to do so. Not-so-big tech, too, has benefited, including many companies that have recently gone public.
The pandemic has highlighted and sped up a fundamental shift towards digital businesses, says Sarah Cannon of Index Ventures, a VC firm. The trend will last for decades, she predicts. Markets concur. The tech-heavy Renaissance IPO Index, which includes most listers of the past two years, is up by more than 40% since January (see chart 2). Zoom, whose videoconferencing app has become ubiquitous amid lockdowns, has seen its share price rise fourfold since floating in April 2019; it is worth $78bn. CrowdStrike, a cyber-security firm which listed in June last year, has quadrupled in value since March.
风投公司Index Ventures的莎拉·坎农（Sarah Cannon）表示，疫情凸显并加速了向数字化商业的根本转变。她预测这一趋势将持续数十年。市场也认同这一观点。纳入过去两年上市的大部分公司、以科技股为主的Renaissance IPO指数自1月以来已经上涨逾40%（见图表2）。Zoom的视频会议应用在封城期间大行其道，自2019年4月上市以来股价增长了三倍，目前市值达780亿美元。去年6月上市的网络安全公司CrowdStrike自3月以来市值已翻了两番。
One thing the latest boom has done is highlight how unhappy startups and VC firms have grown with the current process of going public. It is cumbersome, with reams of paperwork, and can take more than a year. It is also pricey—and seen as too cosy for Wall Street. Investment banks’ fees alone eat up between 4% and 7% of a typical IPO’s proceeds, not counting lawyers and other advisers. Startups and VC firms point to big first-day pops as evidence that offerings are underpriced to give banks’ big investors a quick return. After all, those customers are regulars that must be kept sweet, whereas most startups only go public once.
Disaffection with the IPO process, combined with a renewed desire to go public, has led some firms to consider alternatives. One is a “direct listing” of the sort Palantir is pursuing, and which Spotify, a music-streaming service, and Slack, a corporate-messaging firm, have used to good effect. Asana, which sells web-based project-management software, may be another unicorn to take the direct route. Direct listings use an electronic auction by the stock exchange to get startups a fairer price for their shares than investment bankers might. But they do not allow firms to raise new money. As a result, they are an option only for cash-rich firms.
Another route that has gained prominence is the special-purpose acquisition company. These SPACs, as they are known for short, are shell firms that go public promising to buy one or more private businesses with the proceeds from the listing. The private business then fills up the listed shell through a reverse merger. SPACs have a dodgy history; many have underperformed the broader stockmarket. But the latest lot promise to fix the flaws while preserving the benefits, which include direct negotiations over the purchase price that can make deals faster and more predictable. From January to early August 60 SPACs went public, raising $22.5bn. In July Bill Ackman, a hedge-fund boss, launched a $5bn-7bn vehicle, the biggest so far.
It is unclear if Silicon Valley will embrace SPACs wholeheartedly. The biggest tech firm to have used one is Nikola, a secretive zero-emission-lorry startup which now boasts a market capitalisation of about $16bn. Many entrepreneurs and their backers would resist letting their firms be sucked up into a shell. But SPACs have a place in tech world. On August 18th Kevin Hartz, an early investor in Airbnb and Uber, launched one. Ribbit Capital, a VC firm, is reportedly planning another.
尚还不清楚硅谷的科技公司是否真心愿意选择SPAC。通过这种途径上市的的科技公司中，规模最大的是一家神秘的零排放卡车创业公司尼古拉（Nikola），市值约为160亿美元。许多企业家和出资人不愿意把自己的公司放到一个壳公司里。但SPAC在科技业仍有一席之地。8月18日，爱彼迎和优步的早期投资者凯文·哈兹（Kevin Hartz）启动了一个SPAC。据称风投公司Ribbit Capital也在筹划推出SPAC。
The IPO-industrial complex is not averse to direct listings or SPACs, even if they are less lucrative than the old-school ways. Bankers predict a diverse future of increasingly tailor-made flotations that, say, target specific investors and predetermine how long staff must hold on to their shares. As Greg Chamberlain of JPMorgan Chase, a bank, sums up, “Not all technology companies are the same. They have different objectives.” So long as startups want to cash in, as all ultimately do, they will need Wall Street to shepherd them through.
尽管直接上市或SPAC带来的利润不如传统方式丰厚，但IPO产业综合体并不排斥这些做法。银行人士预测，未来的IPO将更加多种多样，提供更为定制化的上市方式，比如可以面向特定的投资者，以及预先规定员工持股的禁售期。正如摩根大通的格雷格·张伯伦（Greg Chamberlain）总结的那样：“不是所有的科技公司都一样。它们的目标各不相同。” 只要创业公司想要变现——最终它们都会——就还是需要华尔街来指路。