Dec 19, 2017

Tech IPOs faced unexpected headwinds in 2017

Illustration: Rebecca Zisser / Axios

2017 was a year of change and sluggishness for tech IPOs, against a backdrop of record-high stock market prices.

Why so complicated: The arrival of alternative mechanisms, rocky performances from some high-profile issuers (e.g., Snap, Blue Apron), the arrival of deep-pocketed SoftBank, and a renewed public market emphasis on profitability over growth.

Staying private longer

The JOBS Act of 2012 helped tech companies remain private longer by removing a rule that companies must begin publicly disclosing financial information once they had more than 500 shareholders. It's what effectively forced Google to go public, and would have had a similar impact on companies like Airbnb and Uber.

  • "I think the JOBS Act has done permanent harm to the IPO market," says Lise Buyer, founder of IPO consulting firm Class V Group, particularly because sky-high valuations for older companies leave less room for growth post-IPO.
  • SoftBank this year unveiled its $100 billion Vision Fund, which is by far the largest-ever investment vehicle aimed at private technology companies. In fact, it's the largest-ever private equity fund of any kind. It has made delaying going public easier for companies like WeWork, and even recently tried (but failed) to preempt an IPO for fashion subscription service Stitch Fix.
  • Snap's highly-anticipated March listing went smoothly, but its rapid stock price decline may have scared off some other consumer-focused tech companies that were considering IPOs of their own.

Some bold IPO alternatives emerged this year, designed to alleviate the pain of listing, of being public, or both.

  • Venture firm Social Capital took public a special purpose acquisition company in September. While technically an IPO, the real goal was to acquire a tech "unicorn" that wants to avoid its own listing. "The whole process sucks," Social Capital's Chamath Palihapitiya told Axios at the time.
  • Spotify continues to plan for a direct listing, which would circumvent the standard Wall Street float. If successful, it could become a model that others will follow.
  • The Long-Term Stock Exchange emerged to help let public companies focus more on long-term goals than short-term shareholder capriciousness.
  • Several pre-IPO companies got acquired before anticipated listings, such as Cisco buying AppDynamics and Vista Equity Partners buying Datto.
Crystal Ball

A rise in interest rates could lower the amount of late-stage capital for private tech companies, as mutual funds and other large institutional investors shift their asset allocations, says John Tuttle, global listings chief at The New York Stock Exchange. That could create a flood of new issuers, or just better negotiating leverage for SoftBank.

Go deeper

Trump accuses Twitter of interfering in 2020 election

President Trump speaks to the press as he departs the White House in Washington, D.C., on Thursday. Photo: Mandel Ngan/Getty Images

President Trump responded via tweets Tuesday evening to Twitter fact-checking him for the first time on his earlier unsubstantiated posts claiming mail-in ballots in November's election would be fraudulent.

What he's saying: "Twitter is now interfering in the 2020 Presidential Election.They are saying my statement on Mail-In Ballots, which will lead to massive corruption and fraud, is incorrect, based on fact-checking by Fake News CNN and the Amazon Washington Post," the president tweeted. "Twitter is completely stifling FREE SPEECH, and I, as President, will not allow it to happen!"

Editor's note: This is a developing news story. Please check back for updates.

12 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 7:30 p.m. ET: 5,559,130 — Total deaths: 348,610 — Total recoveries — 2,277,087Map.
  2. U.S.: Total confirmed cases as of 7:30 p.m. ET: 1,679,419 — Total deaths: 98,852 — Total recoveries: 384,902 — Total tested: 14,907,041Map.
  3. Federal response: DOJ investigates meatpacking industry over soaring beef pricesMike Pence's press secretary returns to work.
  4. Congress: House Republicans to sue Nancy Pelosi in effort to block proxy voting.
  5. Business: How the new workplace could leave parents behind.
  6. Tech: Twitter fact-checks Trump's tweets about mail-in voting for first timeGoogle to open offices July 6 for 10% of workers.
  7. Public health: CDC releases guidance on when you can be around others after contracting the coronavirus.
  8. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  9. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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Updated 38 mins ago - Politics & Policy

Twitter fact-checks Trump's tweets for first time

President Trump briefs reporters in the Rose Garden on May 26. Photo: Brendan Smialowski/AFP via Getty Images

Twitter fact-checked two of President Trump's unsubstantiated tweets that mail-in ballots in the 2020 election would be fraudulent for the first time on Tuesday, directing users to "get the facts" through news stories that cover the topic.

Why it matters: Twitter and other social media platforms have faced criticism for not doing enough to combat misinformation, especially when its propagated by the president.