The IPO market is getting hot as June wraps up, with 10 companies expected to go public in the busiest week of the year so far. Three of the new issues this week are venture-backed.
Year-to-date in 2017, 69 IPOs have priced, putting it on pace to surpass the 105 new issues in all of 2016, according to Renaissance Capital, an IPO research firm and manager of IPO-focused exchange traded funds.
It’s been two years since this many companies went public, according to Kathleen Smith, a principal at Renaissance Capital.
Three of the 10 companies scheduled to go public this week are VC-backed, after having raised a combined $421 million in venture and growth equity funding. They are joining 17 other venture-backed companies that have gone public on the Nasdaq or NYSE exchanges this year, according to a VCJ analysis of the Thomson Reuters data. The new publicly traded companies this year include Snap, which debuted in March, and Shotspotter, which IPO’d in early June.
Among the new debuts this week is home-delivery meal service Blue Apron, which is leading the pack in valuation and is scheduled to hold its offering on June 29. The day before, the New York-based company cut its valuation expectations by a third, down to $2.08 billion from $3.2 billion, according to a report from Reuters.
Blue Apron raised more than $195 million in venture backing from Bessemer Venture Partners, First Round Capital and growth equity firm Stripes Group, according to Thomson Reuters.
Tintri Inc, a Mountain View, California-based cloud storage company, was also expected to go public on Thursday. The company scuttled its IPO plans the night before it was scheduled to debut on the Nasdaq.
Many of this week’s crop of companies going public are in the biotechnology industry, including two that are venture-backed. Cambridge, Massachusetts-based Mersana Therapeutics began trading June 28. It raised $101 million from investors f-Prime Capital Partners, New Enterprise Associates, Pfizer Venture Investments, Puretech Ventures and Rho Capital Partners.
Aileron Therapeutics, another bio-pharmaceutical company based in Cambridge, Massachusetts, raised $124 million from such firms as Apple Tree Partners, Excel Venture Management, Lilly Venture Management Company and Novartis Venture Funds.
Despite the uptick in companies going public, the market is still below what would be expected for normal issuance, especially given that the S&P has hit record-highs this year, according to Smith.
“The IPO market has been receptive to some of the venture-backed IPOs that have come out,” said Smith, pointing to companies like MuleSoft and Okta, which went public earlier this year and are currently trading at 46 and 41 percent, respectively, above their offering prices. “Yet most of them came out at prices below their peers and then they’ve traded up to meet their peers.”
Smith added: “There’s some truth to the fact that because there’s so many companies that are private and they’ve been valued at higher levels than the IPO market would absorb, they’re staying private longer.” But waiting too long to go public in hopes of a higher valuation, she said, “that’s like waiting for Godot.”
Update: This story was updated when storage company Tintri delayed its IPO plans
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