The coming IPO thaw

The imminent public market debuts of Instacart, Klaviyo, and Arm mark the end of an 18-month freeze in tech IPOs
The coming IPO thaw
Illustration: Vicky Leta / Shutterstock

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What a difference a quarter or two makes.

Not very long ago, the r-word—“recession”—was still hanging in the air, making its presence felt. Public markets had suffered a downturn in 2022, and the tech industry, in particular, had felt the wind blow so harsh and cold that many companies had shelved their plans to go public. Reddit, for instance, had filed an S-1 in December 2021—only for everything to go into deep freeze through the following 18 months, to date. The last venture capital-backed companies to go public in the US involved HashiCorp and Samsara, way back in December 2021. Why debut on an exchange, after all, amid slumping indices and bleak investor sentiment?

Recently, though, some green buds have started to show. Instacart, the grocery delivery company; Arm, the British chip designer; and Klaviyo, the marketing automation company all intend to go public in 2023. Arm’s listing, in particular, is a major one, raising between $5 billion and $7 billion on a valuation thought to be 10 times that amount. Its roadshow will begin after Labor Day, and its stock will be priced on Sept. 13. A successful Nasdaq debut will do more than soothe Masayoshi Son, whose Softbank Group owns Arm; it will relieve the anxieties of several other tech startups marking time before their IPOs.

Arguably, though, the delay has been beneficial. As Quartz’s Michelle Cheng wrote: “The companies filing to go public this year look a little different from their counterparts in 2021 and 2022: They’re actually profitable.” The economic conditions of the last 18 months (more about these below) compelled companies to streamline their balance sheets to tout not just their capital-fueled potential for growth but also their ability to make meaningful profits.

Even the three tech firms wading in this year are doing so with care, so as not to spook investors too much. Klaviyo and Instacart will offer less than 10% of their total shares, according to sources quoted by the Wall Street Journal. And the companies are allocating significant chunks of stock to cornerstone investors well in advance of their listing. Instacart, for example, will sell more than $500 million in stock to Pepsico, Norges Bank, Sequoia Capital, and Valiant Capital Management.

Phil Haslett, founder of EquityZen, an online stock trading marketplace, sees the Instacart-Arm-Klaviyo trio as the tech industry’s advance guard. These companies have demonstrable growth and earnings, so “you’re kind of seeing the best of the best testing the market first,” Haslett said. It’s as if the companies are sticking a collective toe into the water, to see if it’s warm enough for everyone to paddle in.


18 months: The tech IPO drought, the end of which is now in sight

$10-$12 billion: The valuation of Instacart, according to Bloomberg Intelligence analysts, down from $24 billion in March 2022 and $39 billion in March 2021

$428 million: Instacart’s profit in 2022, compared to a loss of $73 million in 2021

4%: The rise in the total value of orders on Instacart in the first half of 2023, compared to the same period in 2022—modest at best

$9 billion: The volume of funds raised by traditional, non-SPAC IPOs in the US as of early July

$87 billion: The volume of funds raised by similar IPOs in the same period in 2021

80%: The share of tech IPOs from 2020-21 that have since registered negative returns. Many of these listings occurred via SPACs.

Twice as poorly: How SPAC IPOs fared compared to traditional IPOs, according to a JP Morgan report (pdf)


Why did tech IPO activity grow so hushed for a year and a half? There were several reasons:

📈 Rising interest rates: As the Federal Reserve embarked on a cycle of rate hikes, investors found that borrowing had become more expensive. They also had alternative avenues of investment: Treasury bonds and certificates of deposit that, thanks to the Fed, returned 5% a year. “Interest rates are not only about the cost of financing, but also getting investors to trade out of 5% risk-free returns,” Jake Dollarhide, the CEO of Longbow Asset Management, told CNBC in June. “You can make 15%-20% in the stock market but lose 15%-20%.”

🚗 The fall of the SPAC: Through 2021 and 2022, several tech firms went public through SPACs, the special-purpose vehicles that made it easy to list on stock markets. In 2021, SPACs raised more than $170 billion worldwide. But as rates and risk both rose, and as the prospect of tighter regulation became clear, banks started to become warier about participating in SPAC listings, and SPAC activity declined.

💸 Drops in valuation. After years of fattening themselves on venture capital money in a low interest rate era, startups suddenly found their valuations dropping as risks grew and funders pushed them to be profitable. Stripe,, Klarna, and Instacart all suffered drops in internal valuation. Companies had to reconcile themselves to these hits, or at least to tighten their belts and bid for profitability the way Instacart did, before they headed back to the markets.

📉 Plunging tech stocks. Through 2022, tech stocks fell by more than 30%, outstripping the overall market dip of 20%. Investors, clearly, were in such a sour mood that they would have given even the most robustly profitable unicorn pause as it eyed an IPO.


Arm, the chip designer, has been based in Cambridge, UK, since its founding in 1990—and yet it has chosen to go public across the pond, in New York’s Nasdaq. The British press portrayed this as a snub: a deliberate rejection of prime minister Rishi Sunak’s personal efforts to persuade Arm to list in London, or at least in both cities. (Indeed, before Softbank took Arm private in 2016, the company’s shares had been traded in both London and New York.)

The Sunak government has embarked on a loud, overt campaign to boost London as a hub for tech listings. Beneath its chipper courting of companies like Arm, though, is an anxiety that Brexit has hurt the allure of London’s stock markets—and, by extension, the city’s status as one of the world’s financial capitals. Last year, listings in London dropped to their lowest level in 10 years, and IPO activity in the UK, as a share of activity across Europe, plunged to 23% between 2017 and 2021, compared to 30% between 2011 and 2015. (The Brexit vote came in 2016.) Through the first half of 2023, there were just 18 issues, compared to 26 in 2022. In an industry governed so heavily by optics, Arm’s choice of Nasdaq is a high-profile loss for the London Stock Exchange—particularly in the middle of this nascent, promising season of tech IPOs.

Thanks for reading! And don’t hesitate to reach out with comments, questions, or topics you want to know more about.

Go public this weekend!

—Samanth Subramanian, global news editor; Michelle Cheng, tech reporter