Return of the IPO

Mark Lonergan, August 22nd, 2018

The recent return of the Sil­i­con Val­ley tech IPO shows up in our August 2018 pub­li­ca­tion of the Lon­er­gan SV150 rank­ings. Over­all, 50 US tech com­pa­nies com­pa­nies launched an IPO from Q1 2017 to Q2 2018, with 10 of these com­pa­nies land­ing a spot on the Lon­er­gan SV150. These include two com­pa­nies with over $1 bil­lion in 2017 annu­al rev­enues (Drop­Box LSV#63 and Stitch­Fix LSV#65), and all 10 of these com­pa­nies have rev­enue growth in excess of 20% annually.

For met­rics on all ten new IPOs, see our LSV150 Insights page under the sec­tion on IPOs.

Three trends I want to highlight:

  • Companies going public are big - REALLY big: the average new IPO company on the Lonergan SV150 lands on the list with a whopping $490 million in average revenues. All but two exceeded the median revenues of the 52 new tech IPOs that made the Mercury News Silicon Valley 150 rankings in their inaugural year over the period 2009-2016.
  • Most IPOs going forward with Founder CEOs:  seven of the ten companies have launched their IPOs with a Founder CEO at the helm. Prominent example include Roku (LSV#93 with Founder CEO Anthony Wood), Okta (LSV#126 with Founder CEO Todd McKinnon) and Zscaler (LSV#143 with Founder CEO Jay Chaudhry). The Founder CEO is often in Chairman of the Board role as well.
  • This trend is accelerating:  most experts expect a dramatic increase in the number of US-based IPOs through the end of 2018 and into 2019. Reasons vary, but a slowdown in M&A pace coupled with a glut of late-stage venture backed companies seem to contribute.

The Silicon Valley 150 rankings have seen 42 companies disappear through acquisition-based activity since the start of 2016, but the regional IPO push looks like it is filling the pipeline with interesting new public tech companies at scale. Silicon Valley is once again reinventing itself, with a focus on growth and innovation!

Mark Lonergan

Founder & Managing Partner, Lonergan Partners

Specialties: Board & CEO placements

650-413-6006

mark@lonerganpartners.com

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