The 2020 IPO market faces strong headwinds, including lingering disappointment over some of the biggest public tech offerings of 2019. Into this cloud of uncertainty, Airbnb is set to become the most recognizable name to go public this year…
In 2019, overall IPOs suffered a big drop in numbers, from 192 in 2018 to 159, according to Renaissance Capital’s annual IPO Review. Of those, 42 of the U.S. IPOs came from the tech sector, down from 52 in 2018.
Renaissance says its Private Company Watchlist (PCW) contains 243 companies that could go public in 2020, including 60 that have hired banks or filed confidentially with the U.S. Securities and Exchange Commission. Once again, Chinese companies will likely be actively pursuing U.S. IPOs, including such potential entrants as Ucommune Group, which operates coworking spaces; the Lizhi Chinese podcasting platform; and Phoenix Tree, an apartment rental platform. There is also speculation that ride-sharing giant Didi Chuxing could seek an IPO this year. This would be good news for Uber, which owns 15% of the company.
But while each year presents its own IPO challenges, 2020 appears to have a number of additional variables in play. For one, it’s a presidential election year in the U.S., which could provoke a number of bombshells that send markets soaring or plunging. Trade negotiations between the U.S. and China remain in flux and seem to shift by the day. The belated arrival of Brexit in the U.K. could also impact some companies. And, as always, random events like a potential war with Iran could scuttle all projections.
Looming over all of this is the poor performance of the very biggest unicorns that went public in 2019, and the catastrophe that was WeWork. These factors have already caused some contenders, like Postmates, to scuttle their IPO plans.
As such, Renaissance is projecting 159 IPOs for 2019, with a range of plus or minus 25. That’s roughly in line with 2019.
With the above caveats, here are the 13 U.S. tech companies most likely to go public in 2020:
Airbnb: The couch-surfing startup turned global travel booking platform will undoubtedly be the most hotly anticipated deal this year. This is largely due to its recognizable name and profound impact on the tourism industry around the world.
But after years of being profitable, the company sank into the red after pumping up spending to combat slowing growth and making a number of acquisitions to expand its business. As IPO investors grow increasingly skittish about backing money-losing companies (at least for now), expect some healthy debate when Airbnb makes its prospectus public.
The company may also serve as a benchmark because it is reportedly pursuing a direct listing, which means it won’t raise any money. If so, it would be following in the footsteps of Slack and Spotify. If this strategy succeeds, it could add further momentum to a trend reshaping the industry’s relationship to Wall Street. Indeed, Airbnb is one of six companies on this list alone considering such a move.
Venture capital raised: $3.1 billion
Wish: This company has quietly become a massive ecommerce platform by selling unbranded and discounted stuff to bargain shoppers. It’s a remarkable success in the face of competition from Amazon. Speaking of which, Amazon may have already made overtures to the independent-minded company. The real drama may be whether Amazon tries to swoop in with an unbeatable offer, Walmart tries to snatch it away, or it remains a publicly traded independent ecommerce force.
Venture capital raised: $1.6 billion
DoorDash: This food delivery startup has seen rapid growth but also faces intense competition in a sector that is packed with money losers, including Uber Eats and Postmates. Based in San Francisco, DoorDash still operates primarily in the U.S.
The company has gobbled up some remarkable funding rounds, including a $535 million round led by SoftBank. That’s a kind of good news-bad news situation, as being backed by SoftBank invites comparisons to WeWork and other misfires. DoorDash is also reportedly considering a direct listing.
Venture capital raised: $2.1 billion
Procore Technologies: The construction management software company may not sound sexy, but it has reportedly hired Goldman Sachs to lead an IPO that would could value Procore at $4 billion. Worth noting is that the best performing IPOs of 2019 were the smaller and mid-sized companies with solid businesses. Like this one.
Venture capital raised: $304 million
Casper: This company sells mattresses through its online platform. Oh, and also sheets and pillows. That’s about it. Is it a tech company because it has a website and ships stuff? Dunno. It does have a chatbot. VentureBeat once referred to Casper as a “Nighttime lifestyle brand,” which makes me gag a bit even as I write it. Still, it has reportedly hired Morgan Stanley and Goldman Sachs, so for now we’ll give it the benefit of the doubt and call it a tech company, because why not?
Venture capital raised: $355 million
Robinhood: The startup offers free stock trading through its app, making interest from the money it holds for customers. Its model has been popular with new investors while making Wall Street a bit nervous. There is also some talk it may go the direct listing route.
Venture capital raised: $912 million
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