UPDATED 04:02 EDT / APRIL 04 2016

NEWS

Tech IPOs fall off a cliff: Not one in the first quarter of this year

The market for tech IPOs has nosdived. Not one tech or Internet-related firm went public on the U.S. stock exchanges in the first quarter of 2016, according to newly published data from Dealogic, which says it’s the first time that’s happened since 2009.

The picture was completely different just two under years ago, when we saw a whopping 24 tech firms go public in the second quarter of 2014, in deals valued at $8.5 billion. The following quarter saw ten more companies launch IPOs, with China’s Alibaba Group Holdings Ltd., breaking all the records with its $25 billion deal.

But that trend has now come to an abrupt halt. Startups began putting off or avoiding IPOs altogether sometime around the middle of last year, even though many of them continued to raise eye-watering amounts of cash. There are now more than 140 billion-dollar rated startups, including almost 90 in the U.S. alone. The biggest by far is Uber Technologies Inc., valued at $62.5 billion, followed by China’s Xiaomi Inc. ($46 billion) and Airbnb Inc. ($25.5 billion).

However, even these crazy funding rounds that have helped startups become so big are starting to dry up. Silicon Valley’s startup funding declined by 30 percent in quarter four of 2015 compared to the quarter before, with just $27.7 billion raised. Things haven’t improved much this year, and with capital so difficult to come by, many startups are now more focused on balancing the books properly, Dealogic said. As such, things like staff perks are now off the table, while some are even altering their business models altogether. Somewhat ironically, Dealogic says that if investors refuse to open up the purse strings anytime soon, many startups could be forced into an IPO in order to obtain more funds, regardless of whether the markets are friendly or not.

Intriguingly, it seems that the exact opposite trend is hitting venture capital firms at the moment, which are raising cash faster than at any time since the dot-com bubble at the turn of the millennium. In the first quarter of this year, U.S. venture capital firms secured about $13 billion in financing.

Image credit: aitoff via pixabay

A message from John Furrier, co-founder of SiliconANGLE:

Your vote of support is important to us and it helps us keep the content FREE.

One click below supports our mission to provide free, deep, and relevant content.  

Join our community on YouTube

Join the community that includes more than 15,000 #CubeAlumni experts, including Amazon.com CEO Andy Jassy, Dell Technologies founder and CEO Michael Dell, Intel CEO Pat Gelsinger, and many more luminaries and experts.

“TheCUBE is an important partner to the industry. You guys really are a part of our events and we really appreciate you coming and I know people appreciate the content you create as well” – Andy Jassy

THANK YOU