People are no longer crazy in love with Silicon Valley’s tech companies’ initial public offerings (IPO), Business Insider (opens in new tab) writes in an extensive report.
“Five of the 12 U.S.-based tech companies that went public this year, or 42 per cent, priced their shares at a valuation below or nearly the same as their private market value, compared to 24 per cent of the 29 that went public in 2014,” the report says.
"People are no longer out of their minds with valuations and expectations," said Adam Marcus, managing partner at OpenView Venture Partners in Boston.
It seems as the Silicon Valley bubble will not burst, but will instead simply wind down. Maybe that’s not so bad.
The difference has prompted some companies to delay or completely give up on their initial public offering plans, according to the report.
“And some late-stage investors — while they will still get paid — may see smaller returns than they gambled on.”
But it’s not just the decreasing expectations here at work – large investments are also partly to blame. Large funding from late stage investors have allowed tech start-up companies to stay private longer, and as their value grew, a big increase in the value of their shares in an IPO are harder to achieve.
Even though many start-ups have decided to lay low for a while, and postpone their IPO plans for at least a year, others are under so much pressure by their investors that they have decided to head outside, even though the weather is less than ideal.