The Future of IPO’s

Before I get into it…this made me laugh:

Onwards…

I might as well chime in with my 4 cents on IPO’s.

In 2017 it was all about the ICO’s which was probably the cycle low for IPO’s.

As we now know, the ICO was a mostly awful distraction.

I participated in just one ICO – Civic (a portfolio company of Social Leverage) – which saw incredible gains and now has fallen below the pre-sale price of 10 cents.

With the ICO craze behind us, I am extremely bullish on the future of IPO’s, but I have a different take on what could and should happen to bring them back.

Last week $UBER, $LYFT and $SLACK (these have been the ticker given to them on Stocktwits over the years) filed to go public in 2019.

The rush we will see for late stage Unicorns to get public makes sense now that the markets are rolling over. Money has a tendency to get tight as stock markets cave.

Sadly, Goldman Sachs and JP Morgan will be in the middle of it. It is like the financial crisis never happened when it comes to all thing IPO’s.

In August 2017, I was rooting or Uber the IPO 

In October 2017 Fred Wilson talked about IPO’s being back in favor:

Here is some data on the last 100 IPO’s

So here we are at the end of 2018 and as Fred said, assuming markets behave, 2019 will be full of Technology Unicorn supply. He wrote about it again yesterday and it is a good read.

I think we would be much further along today if more companies had followed Google’s 2004 Dutch Auction (here is a good description of it).

I believe if Twitter had done things differently, there may be no need for Bitcoin and Shitcoins and Twitter could have been be a leader in financial services including IPO’s. Their loss is somebody else’s future gains.

Whatever happens next it is time for some big changes in IPO’s.

In 2018, the Spotify direct listing was unique (this was a good read on the subject) and will hopefully serve as a beacon to more innovation.

We live in an era of incredible communications products and sophisticated software. We also have financial startups with massive long tail distributions like Robinhood, Venmo and Square. The Nasdaq, Carta, Secfi, Stock X, GOAT, Rally Rd, Etoro, Stocktwits, Click IPO and Fintwit are all able to play a role.

The time is now for the best growth companies to tap the enthusiastic investors in regulated modern brokerages like Robinhood to own their IPO shares.

To fix this IPO problem, we mostly need buy in from the CEO’s and boards of these fast growing companies to change the distribution, not just fintech founders.

If the fintech founders and engineers would spend their time solving simpler financial innovations and working with regulators early, the banks would suffer deeper and longer lasting cuts and force the change we need to get costs and slippage down and IPO’s much earlier in the growth cycle.

I am confident this will happen.

Full disclosure – We are investors in Stocktwits, Etoro, Rally Rd, Robinhood and Secfi. I own shares in Paypal (Venmo).