Illustration: Lindsey Bailey/Axios
Before the government shutdown, the IPO market was coming back to life — with some enterprise tech companies testing the waters and others talking about it, despite the lofty metrics for going public.
Why it matters: IPOs seem to captivate many and investors want more, but few realize the huge expectations for such undertakings.
State of play: Tech companies now need at least $250 million in revenue and must be profitable, or at least close to it, if they are to consider an IPO, Morgan Stanley's Mitzi Madrid Diaz said at a Tech Week event in San Francisco this week.
- Since tech investors love growth, a growth rate of about 25% is needed too, said Madrid Diaz, global capital markets executive director at the investment bank.
- IPO hopefuls also need an AI strategy to tell investors about — either how it's used or how it won't kill the company, she added.
Flashback: It doesn't seem that long ago that a company needed less than half that revenue and just a story about how it would get to profitability.
By the numbers: Nevertheless, Morgan Stanley counts 19 tech IPOs so far this year, with 11 of them still trading above their IPO price when the week started.
- And IPOs just had their best quarter since 2021.
What's next: Expect more of them — especially in Q1 and Q2.
- "We are seeing loads of activity," Matthew Gemello, an Orrick attorney, tells Axios Pro.
The bottom line: The metrics are higher than ever, but it doesn't seem to be slowing down companies right now.
Go deeper: All eyes are on Databricks.
