2019 saw many high-profile VC-backed tech IPOs. While the number of public offerings in this category was only slightly higher than in the prior years, the 22 newly listed companies generated record exit value for VCs and LPs.
Despite a weak public market performance of a number of highly anticipated 2019 IPOs, a handful of sources told Venture Capital Journal that the IPO pipeline for this year is expected to be robust and the number of debuts will likely eclipse that of 2019.
As for who is expected to list on public markets this year, the latest CB Insights report analyzed 281 “most promising and highly-valued” VC and private equity financed tech companies in the US that could potentially make a public debut in 2020.
The report identified the top five IPO prospects, using CB Insights proprietary data-driven algorithm. These companies are:
- GitLab, a project planning and source code management platform developer with $436 million in funding from such backers as Khosla Ventures, GV and Y Combinator;
- Snowflake, a cloud data warehousing company with $929 million in funding from investor Sutter Hill Ventures, Redpoint Ventures, Wing VC and Altimeter Capital;
- Credit Karma, a personal finance hub with $369 in million (excluding secondary market capital), from backers including Founders Fund, Felicis Ventures, Ribbit Capital and Capital G;
- Unity, an engine for video game development with $974 million in funding from backers like Sequoia Capital, DFJ Growth and Thrive Capital; and
- Procore, a construction management software startup with $255 million (excluding secondary market capital) from such backers as Bessemer Venture Partners, ICONIQ Capital and Lumia Capital.
Other select companies identified by CB Insights as IPO candidates are AirBnB, DoorDash, Asana, Wish, Squarespace, Roblox and Databricks. Some of these companies already announced their plans to go public, and in the case of GitLab, even revealed their intended debut date.
One thing to note is that this year’s list of possible IPOs does not have many household names. The public markets may be less receptive of high-growth, but unprofitable consumer companies following the poor stock performance of many brand name companies, including Uber, Lyft and Peloton, which went public last year. But since enterprise-focused stocks like DataDog and Zoom Video Communications have appreciated significantly since their 2019 debuts, public investors are expected to be more interested in high-margin software companies.
Another unusual thing about 2020 IPO prospects is that some of these companies may decide to forego the traditional IPO process and opt instead for a direct listing, a novel approach where all the shares of the company are made available for trading right away.
Spotify and Slack are the only two companies in history which have taken this route, but excitement about the method has been building and such companies as Asana, Snowflake, GitLab, AirBnB and DoorDash, are reportedly considering a direct listing over an IPO.
CB Insights also analyzed investors in the 2020 Tech IPO Pipeline companies and found that Tiger Global Management, Sequoia Capital and Andreessen Horowitz had backed the largest number of companies on the list, each with 20 or more in their portfolio. Other investors with many IPO-prospect companies are Spark Capital, GV, IVP and Kleiner Perkins.
Top 20 investors and percent of their investments made at the Seed or Series A round are presented below: