Techstars: Tech founders are shying away from IPOs after prolonged market downturn | Wilnesh News

Silicon Valley is famous for technology companies that started in garages and grew into large, globally recognized public companies. from Oracle and Microsoft arrive Google and Facebookpublic markets are responsible for turning ambitious tech founders into billionaires.

But the appeal of IPOs is waning, according to one person poll Published this week by startup accelerator Techstars. Of the 1,550 entrepreneurs surveyed by Techstars, only 15% said their long-term goal was an IPO. This is down from 16% a year ago.

After a long bull market in high-growth software and Internet stocks, the tech IPO market collapsed in 2022 as inflation surged and interest rates rose, forcing investors to become risk-averse, slashing valuations and causing many late-stage companies to delay plans to go public .

Last year was a record period for new product launches, with companies including Roblox, Robin Hood, Rivian and UiPath Impact the market. There have been few notable tech IPOs in the past two and a half years.

Techstars said: “Coupled with a lack of confidence that IPOs will rebound in the short term, this year’s data further highlights the trend of new startups staying private longer, while IPOs are no longer favored by the vast majority of early-stage entrepreneurs,” Techstars said in its report. expressed in.

Thirty-four percent of entrepreneurs surveyed said they would prefer to be acquired by a public company, down from 36% last year, while 30% said their goal was to remain private or independent, up from the previous report. 28%.

Investment banks have been preparing for an economic rebound.

Colin Stewart, Morgan Stanley’s global head of technology equity capital markets, told CNBC in April that “the IPO market is back,” predicting that 10 to 15 technology companies could be listed by the end of the year. Stewart said a high-priced and well-traded IPO “bodes well for the future.”

Stewart’s comments are at Reddit Listed in March, becoming the first major social media company to IPO since 2017 interest 2019. Aster LaboratoryA company that sells data center connectivity chips to cloud and artificial intelligence infrastructure companies went public in the same week, followed closely by data management companies scarlet letter in April.

This follows a brief jump from chip designers to events in September armGrocery Delivery Company Instant shopping cart and cloud software providers Clavio Debut.

However, emerging tech companies on Wall Street have been mostly quiet compared to the period leading up to 2022. Uncertainty over November’s presidential election points to a scarcity of deals for the rest of the year.

“We have an election coming up and that’s not going to help the market in the second half of the year,” Athena Theodorou, head of software banking for Europe at UBS, told CNBC’s “Squawk Box” on Wednesday. “We do expect the market to remain subdued in the second half of the year,” Theodorou However, she said that the European IPO market has begun to show signs of vitality.

watch: The European IPO market is coming back