Axios Event: IPO market showing slow but steady signs of improvement following 2023 slump

The U.S. IPO market is showing signs of recovery this year following a significant decline that lasted for much of 2023.

Why it matters: While the amount of U.S. IPOs has increased this year in comparison to last, there is still a delay in companies coming to market at the levels seen in recent peak years like the 2021 boom.

• Axios business editor Dan Primack and senior business and technology reporter Kia Kokalitcheva hosted conversations with New York Stock Exchange global head of capital markets Michael Harris and Class V Group founder and partner Lise Buyer at this virtual event.
• This event was sponsored by Cooley.

What they're saying: "When you think about where we are in terms of issuance, we actually are seeing a significant increase in terms of proceeds overall," Harris said, sharing optimism for the direction the market is heading.

• He anticipates an increase in deal activity soon, citing a strong "pipeline" of companies that are waiting for the right time to go to marketplace.

State of play: The overarching sense is that companies are still cautious about coming to market despite signs of signaling improvement.

• "Valuations are obviously at an all time high, that's helping things quite a bit. Volatility is still very low, and the interest rate environment seems to be also at least settling to a point where investors or issuers are ready to start moving forward … but obviously it takes a while for companies to get to the point where they feel comfortable moving forward with their own deals," Harris said.

Buyer thinks IPO market activity will continue to be "stop-start" for a bit and named a "disconnect between reality and expectations on valuation" as one reason behind the apprehension.

• "I think we're still getting over the hangover, frankly, of '20 and '21 and of risky markets," Buyer said.

What we're watching: Some of the companies that have gone to market recently have performed very well, which Buyer said is encouraging, but also difficult to generalize what a few recent successes could mean for market conditions in the coming months.

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In a View From the Top conversation, Cooley partner Rich Segal echoed the optimism for an improving market, citing significant improvements in proceeds so far this year.

• "The IPO market is showing strong signs of life. Total proceeds for IPOs on U.S. exchanges totaled over $8.6 billion in Q1, more than triple a year ago, and a three-year high," Segal said.