Zero IPO

The IPO window closed in 2022. There have been “only” 167 IPOs on the US stock market so far. As of October 22, 2022, this is 80% less than at same time in 2021, which had 845 IPOs by this date.

IPO is typically the main exit avenue for VC-backed startups – of the $774B US VC exit in 2021, 88% came through IPOs and 12% through M&As.

The closing of the IPO window is a worldwide phenomenon caused by the depreciation of multiples which was caused by interest rates increases.

Because of this closing, a backlog of great US VC-baked companies, ready to turn public as soon as the IPO window reopens, has built up: Stripe, Databricks, Plaid, Rubrik, Netskope, and many others.

In Bovespa Brazil, 10.6 companies become public per year, on average (from 2010-2021); 2021 being the record year with 73 IPOs. But in 2022 there was none.

Indeed, 25 companies gave up the Bovespa listing in 2022, from large companies such as CSN Cimentos (cement) and Cencosud (food retailer) to tiny “techish” companies such as Claranet (cloud and cybersecurity — annual revenues = $16M) and Interplayers (health care hub — annual revenues = $25M). And there were other tech-enabled companies in the dropout list: Ish Tech (cybersecurity), Datora (Communication Platform as a Service), Vero (ISP consolidation play led by Vinci PE), RV Tecnologia (fintech), Qestra Tecnologia (a constellation, to be merged, of 18 IT services companies).

Conclusion

When deciding where to invest in tech-VC check before the historical IPO throughput, the quality of the companies in the IPO pipeline and the previous performance of the listed companies.