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<blockquote data-quote="al97" data-source="post: 150167" data-attributes="member: 29424"><p>3 Oct - Commercial Awareness - Technology</p><p>Topic: Hot Big Tech IPOs falls to room temperature </p><p><a href="https://www.ft.com/content/665137ac-0c93-4b08-8ca0-7197d835e9cd?accessToken=zwAAAYt4KMNxkc9mUTesDJNLCNOMoHGX2DXpzQE.MEUCIHucX5zW11IUy7srOfuQYbgL3DwKQGDTVDCaYzKKy30VAiEAqNmplDqSUx5dTF-lrC8Ks9PD1LejcuZ_Cp8jkyWsMi0&segmentId=7d4bcc2e-e664-92ba-62e3-5590579f1902" target="_blank">https://www.ft.com/content/665137ac-0c93-4b08-8ca0-7197d835e9cd?accessToken=zwAAAYt4KMNxkc9mUTesDJNLCNOMoHGX2DXpzQE.MEUCIHucX5zW11IUy7srOfuQYbgL3DwKQGDTVDCaYzKKy30VAiEAqNmplDqSUx5dTF-lrC8Ks9PD1LejcuZ_Cp8jkyWsMi0&segmentId=7d4bcc2e-e664-92ba-62e3-5590579f1902</a></p><p><a href="https://www.cnbc.com/2023/09/20/instacart-loses-almost-all-its-ipo-gains-by-second-day-on-nasdaq.html" target="_blank">https://www.cnbc.com/2023/09/20/instacart-loses-almost-all-its-ipo-gains-by-second-day-on-nasdaq.html</a></p><p><a href="https://www.ft.com/content/2b8f723d-52b0-4ea5-9703-7c65e3c6bd35" target="_blank">https://www.ft.com/content/2b8f723d-52b0-4ea5-9703-7c65e3c6bd35</a></p><p></p><p></p><p>On the second day of trading, Instacart fell more than 11% below their first day. The plunge extinguished the IPO gains. </p><p></p><p>The two biggest IPOs recently are Arm and Instacart, both in the technology sector, the former is a Cambridge-based semiconductor, listed on NASDAQ. The latter is an online grocery delivery platform, also listed on NASDAQ, closed with a gain of 12%. The third IPO is Klaviyo, marketing automation software, which raised 15% more than its IPO price. </p><p></p><p>Interest rate ends the short Spring of IPO</p><ul> <li data-xf-list-type="ul">The IPO market entered winter since 2021 due to inflationary pressure and rising interest rate. </li> <li data-xf-list-type="ul">The falling share price suggests that investors are still hesitant to buy into tech companies. </li> <li data-xf-list-type="ul">On the day of Klaviyo’s IPO, was also the day FED announced their plans to support another interest rate rise this year and fewer cuts than expected in 2024. </li> <li data-xf-list-type="ul">Interest rate is painful for private start-ups as they are valued by their future cash flow. </li> </ul><p></p><p>VC are “forced” to list for less desirable reasons</p><ul> <li data-xf-list-type="ul">VC that planned to go IPO delayed their plans. Pitchbook estimated that almost 80 IPOs are in the backlog. </li> <li data-xf-list-type="ul">If they do go out despite the risky landscape, it would not be the traditional reasons of raising growth capital or liquidity.</li> </ul><p></p><ol> <li data-xf-list-type="ol">Employee tax liabilities associated with Restricted stock units (RSU) </li> </ol> <ul> <li data-xf-list-type="ul">RSU are shares offered to employees that allow them to cash in when a company exit — acquired or goes public </li> <li data-xf-list-type="ul">Stripe, Klaviyo, Instacart have offered RSU</li> <li data-xf-list-type="ul">Stripe raised more than $6.5bn to cover employee tax liabilities that comes from RSU. </li> <li data-xf-list-type="ul">Instacart is effectively using all of the $600mn proceeds from its IPO to settle costs RSU-related costs. </li> <li data-xf-list-type="ul">Klaviyo used almost all of $60mn to settle the outstanding RSUs</li> </ul><p></p><ol> <li data-xf-list-type="ol">The need for liquidity </li> </ol> <ul> <li data-xf-list-type="ul">VC investment is more long-term than PE as their investment lifecycle is usually 10 years. The ROI on this cycle determines how much they can raise during their next funding. VC firms need start-ups to go IPO or sale in order to distribute returns to their investors </li> </ul></blockquote><p></p>
[QUOTE="al97, post: 150167, member: 29424"] 3 Oct - Commercial Awareness - Technology Topic: Hot Big Tech IPOs falls to room temperature [URL]https://www.ft.com/content/665137ac-0c93-4b08-8ca0-7197d835e9cd?accessToken=zwAAAYt4KMNxkc9mUTesDJNLCNOMoHGX2DXpzQE.MEUCIHucX5zW11IUy7srOfuQYbgL3DwKQGDTVDCaYzKKy30VAiEAqNmplDqSUx5dTF-lrC8Ks9PD1LejcuZ_Cp8jkyWsMi0&segmentId=7d4bcc2e-e664-92ba-62e3-5590579f1902[/URL] [URL]https://www.cnbc.com/2023/09/20/instacart-loses-almost-all-its-ipo-gains-by-second-day-on-nasdaq.html[/URL] [URL]https://www.ft.com/content/2b8f723d-52b0-4ea5-9703-7c65e3c6bd35[/URL] On the second day of trading, Instacart fell more than 11% below their first day. The plunge extinguished the IPO gains. The two biggest IPOs recently are Arm and Instacart, both in the technology sector, the former is a Cambridge-based semiconductor, listed on NASDAQ. The latter is an online grocery delivery platform, also listed on NASDAQ, closed with a gain of 12%. The third IPO is Klaviyo, marketing automation software, which raised 15% more than its IPO price. Interest rate ends the short Spring of IPO [LIST] [*]The IPO market entered winter since 2021 due to inflationary pressure and rising interest rate. [*]The falling share price suggests that investors are still hesitant to buy into tech companies. [*]On the day of Klaviyo’s IPO, was also the day FED announced their plans to support another interest rate rise this year and fewer cuts than expected in 2024. [*]Interest rate is painful for private start-ups as they are valued by their future cash flow. [/LIST] VC are “forced” to list for less desirable reasons [LIST] [*]VC that planned to go IPO delayed their plans. Pitchbook estimated that almost 80 IPOs are in the backlog. [*]If they do go out despite the risky landscape, it would not be the traditional reasons of raising growth capital or liquidity. [/LIST] [LIST=1] [*]Employee tax liabilities associated with Restricted stock units (RSU) [/LIST] [LIST] [*]RSU are shares offered to employees that allow them to cash in when a company exit — acquired or goes public [*]Stripe, Klaviyo, Instacart have offered RSU [*]Stripe raised more than $6.5bn to cover employee tax liabilities that comes from RSU. [*]Instacart is effectively using all of the $600mn proceeds from its IPO to settle costs RSU-related costs. [*]Klaviyo used almost all of $60mn to settle the outstanding RSUs [/LIST] [LIST=1] [*]The need for liquidity [/LIST] [LIST] [*]VC investment is more long-term than PE as their investment lifecycle is usually 10 years. The ROI on this cycle determines how much they can raise during their next funding. VC firms need start-ups to go IPO or sale in order to distribute returns to their investors [/LIST] [/QUOTE]
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