It’s raining tech IPOs.
After years of raising money on the private markets, companies from Uber to Pinterest to Slack are taking the plunge into the public markets in 2019 (Lyft already did). Together, the tech companies expected to go public this year have raised more than $50 billion from private investors, roughly equivalent to the market capitalization of General Motors. Many of their private valuations are enormous, with Uber last valued at $76 billion and The We Company (formerly known as WeWork) at $47 billion.
With so many private investors willing and able to provide capital, you might wonder, why bother going public at all? One reason is that an initial public offering can be seen as a sign of maturity in the lifecycle of a company. Another, perhaps more relevant, reason is that people who have invested their time and money into these companies are ready to get paid. An IPO is the main mechanism by which venture capitalists and employees with large stock grants convert their paper holdings into actual wealth. Also fueling the rush to IPO are concerns that with the economy edging closer to another recession, it’s better to beat the downturn to market then get stuck behind it.