One Strategy Group CEO David Meadvin writes in MarketWatch that public stumbles and layoffs at the tech titans are obscuring a positive trend among the startup and growth tech sectors. In fact, their continued success and expansion suggest that this winter for IPOs may soon be drawing to a close.
And unlike the SPACs and meme stocks of prior years, the companies that go public in the future will be of a higher quality.
“The startup and growth tech sectors are changing fast. Many of the lower-quality companies that rose in the wake of the massive market swell over the past few years have now gone under or are running on fumes. The stronger companies – those with real market fit, growing revenue, and meaningful innovation engines – are now well positioned for sustainable success. Many are now leaner, on the path to profitability, and opportunistically picking up tech talent that big tech has cast aside. The pre-IPO growth sector is now in a strong position versus big tech."
“The implications for the prospects of the IPO market are significant. From an all-time high in 2021, IPOs fell more than 80 percent last year. This year is off to an even slower start. But the vast majority of growth tech CEOs I speak with see an IPO not as a matter of if, but when. They’ve spent the past year getting their financial houses in order, strengthening their products, hiring advisors, and quietly doing all the things necessary to be market-ready. All the pieces are in place for a massive IPO rebound – and unlike the SPAC craze of 2020-2021, which saw many companies of questionable quality go public, the next IPO wave will be far higher quality.”
