The tech IPO frenzy of the early pandemic came to an abrupt end in 2022, as capital dried up following the Fed’s rate hikes.
Now, the money is flowing a little more freely. The same number of companies have gone public in the first quarter of 2024 as last year, but they’ve raised about three times as much capital ($7.8 billion), according to Will Braeutigam, Deloitte’s U.S. Capital Markets Transactions Leader.
And while the first quarter’s IPOs included a number of companies in life sciences and consumer industries, more firms in the tech sector are announcing plans to debut. Much of that trend owes thanks to Astera Labs and Reddit— an AI upstart and established social media company, and two of the biggest IPOs of the year so far, raising a cumulative $1.5 billion. Braeutigam said that their initial success has encouraged firms that were thinking about going public last fall — but decided against it because of market volatility — to plan and price their IPOs. Those companies include Ibotta, Inc., a Colorado-based tech firm, which priced its long-awaited IPO in late March that would raise $100 million. They also include Rubrik, a data security software provider backed by Microsoft that filed to go public Monday, also planning to raise $100 million.
While Astera Labs and Reddit shares have come down from eye-popping highs, they’re still trading well above (in Astera’s case, double) their IPO prices. Their continued prosperity — which remains to be seen, particularly in Reddit’s case — will determine if the “mini tech IPO window” is sustained.
“There are lots of eyes on these larger, earlier IPOs [in 2024], and their performance will be key to opening up what I’ve been referring to as mini IPO windows to a larger IPO window,” Braeutigam told Quartz.
Even with the uncertainty that election years bring to the market, Braeutigam forecasts that companies will raise about 50% more capital this year through IPOs, at least.
“Valuations are starting to get higher,” he said, since there’s less volatility in the stock market and the Fed has said it plans to lower rates this summer, though that plan could be put on ice.
By the numbers
$1.46 billion: Capital raised by Astera Labs and Reddit from IPOs
98.6%: How much Astera Labs stock is up on Tuesday from its IPO price of $36
$30 billion-$35 billion: Range of how much capital Braeutigam thinks IPOs will raise in 2024, factoring in volatility from the U.S. presidential election
$40 billion: Typical amount of capital raised in IPOs over the last decade, according to Braeutigam’s estimates