2018 will be remembered as the year during which markets reached all-time highs (particularly tech stocks), and also as the worst year for stocks since the last financial crisis began in 2008. Last year we saw two American tech companies surpass $1 trillion in market cap—Apple and Amazon—only to proceed to lose over $300 billion in value each in a matter of months.
Despite a bit of a recovery at the end of the year, 2018 still finished with the Dow, S&P 500 and Nasdaq lower by 5.6%, 6.2% and 4%, respectively. Last year’s IPO market mimicked much of 2018’s volatility, with certain issuers weathering the storm and others bringing investors steep losses.
So how was 2018’s IPO performance?
We break down last year’s tech IPOs below using information sourced from Crunchbase. Please note we excluded four issuers from our analysis that listed their shares through American depositary receipts (ADR).
Last year, nearly 45 tech companies debuted on U.S. exchanges, selling approximately $28 billion of company shares (note this includes Spotify’s direct listing, which resulted in over $9 billion going to prior Spotify shareholders instead of the company’s balance sheet). The average company raised nearly $650 million while the median amount raised was only $214 million, indicating there were a significant number of large IPOs.
So, which were the largest IPOs of 2018…
…and which sectors attracted the most public markets capital?
*Excludes Spotify’s direct listing **Includes only 1 company in each of the following sectors: AdTech, Automotive, Car Sharing, Energy, Insurance, IoT, and Software Outsourcing
While Chinese and American companies dominated the IPO markets in 2018, with four companies each in the top 10 tech IPOs, Brazilian fintech company PagSeguro raised the most capital of any company. Although it didn’t actually raise any capital in its direct listing, Sweden’s Spotify sold by far the most equity, with existing shareholders dumping over $9 billion worth of stock onto the NYSE. Perhaps unsurprisingly, Media & Entertainment received the most public markets funding last year, even without counting Spotify’s IPO. Chinese music streaming giant Tencent Music raised over $1 billion in its IPO, while another Chinese entertainment company, IQIYI, raised $2.3 billion to support its television and movie portal. Closely following Media & Entertainment were the FinTech, SaaS and eCommerce sectors.
A lot of money was raised, but how have 2018’s IPOs performed? Some have performed quite well…
…others, not so much.
2018 brought a mixed bag for the markets overall, and much of the same can be said about the top tech IPO winners and losers. Several companies have continued to perform strongly, posting 20% - 40%+ gains through yesterday. Of the nearly 45 tech companies that went public last year, 19 have generated positive returns. That, of course, implies that the majority of 2018 tech IPOs continue to have negative performance, some as high as (50%+). On the bright side, so far in Q1 2019, almost 40 of these companies are in the black with an average YTD gain of approximately 15%.
So what will 2019 bring?
As we look ahead to 2019, we’re reminded that 2018 was a year much like any other in terms of investing performance.
Some investments have performed poorly while others have performed well. For example, while unicorn IPOs from ADT (down 43% from IPO) and Dropbox (down 22% from IPO) have been followed by less than stellar market performance, companies like Zscaler (up 34% from IPO) and Eventbrite (up 36% from IPO) continue to provide strong returns to investors. As far as recent market performance is concerned, only time will tell if we’re at the beginning of a sustained downturn—but until then, we’re trying not to let recent market volatility cloud the big picture. Many tech companies continue to perform strongly, and as we kick off 2019, we still expect some blockbuster tech IPOs this year. For our list of 2019’s IPO predictions, check out our IPO Outlook here.
How often we hear this clichéd line espoused by those who have come into the new year with fresh hopes for righting wrongs, picking up healthier habits, and for bettering themselves by measuring up against whatever definition they so choose. A platform is no different.
Sure, the site itself has grown tremendously in its current state. We have been featured in major publications. We have completed over 6,000 transactions in over 125 different companies. And those that were with us on Thanksgiving know that we have doubled our headcount and look to continue on that trajectory over the next twelve months. But there’s always room for improvement. And given one of the driving missions of EquityZen is to educate the public on the private markets, we decided that there was no better place to start than our Knowledge Center.
A universal search? Check. A sleek new design? We got you. New features to explore? You betcha. Strap in your seatbelts, ladies and gentlemen, and get ready to joyride through our brand-new Knowledge Center.
Unveiling the EquityZen Knowledge Center 2.0
We are incredibly proud to present to you the new Knowledge Center! From blog posts, to infographics, to regularly updated insights from our Research department, the new Knowledge Center is truly your all-in-one go-to resource for all things private markets, tech, and more. Have a look at the new layout:
That’s right, folks. We gave this page a complete makeover, moving away from the long lists and block text, and instead choosing a more visually stimulating design that cleanly outlines the many exciting and informative options users have to choose from. Our Overview page is broken out into four sections: the Pre-IPO Investor Starter Kit, Research Materials, Content Center, and a new section called “What We Are Reading.” This new addition provides a window for you, the user, to view the articles our team is focusing their attention on in order to keep a pulse on the finance and tech worlds alike. Fan favorites like the Path to IPO and the EquityZen Market Sentiment Index can all be found directly from the Overview page of the Knowledge Center.
Insights From EZ to You
One point of emphasis for this remodel was to bring to the pieces of content users would most care about to the forefront. When we pored over the data to see what it is our users were most interested in and most vocal about, the answer was clear: our private markets research reports. These analyses are featured prominently throughout the industry, often appearing on publications like Yahoo! Finance, Bloomberg, and CNBC.
Thusly, we built in the EZ Insights section. Our Research Team works hard to bring cutting edge insights to those seeking more wisdom about this space. Now, it’s easier than ever to browse through that analysis, find the most recent or most relevant pieces, and download them directly without jumping through any hoops.
Additionally, we have classified each of these reports into different subgroups of analysis. Those groupings are Market, Sector, Company, and Founder. Each time we put out a new report, you will see it featured up at the top, as well as placed into the corresponding bucket.
Have you ever been browsing through TechCrunch, or Axios, or perhaps daydreaming off the coast of St. Lucia and thought to yourself, “I wonder what steps would be necessary for a large public company to be taken private?” (Yes, these are the things EquityZen team members find themselves daydreaming about; yes, we’re proud of this). Though the usual spots like Quora or Investopedia may have solid answers for certain questions, there are plenty of smaller questions that do not (and likely have not) translate into large think-pieces or lengthy research reports. However, it would still ease your mind to have an expert in this area to answer your question.
Well, fear not, for now you can Ask EZ! In this new section of the Knowledge Center, users can write in the topics, questions, and general curiosities they’d like to hear our private market experts opine on and/or provide some clarity. While they cannot answer every question asked, our Research Team will be dedicating time each week to answering the most intriguing, informative, and entertaining inquiries. This makes our process more interactive, allowing our tremendously educated and inquisitive user base the ability to push the dialogue and research forward. Start writing in your questions and Ask EZ today!
Explore the World of EZ
We encourage you to check out this new Knowledge Center and utilize the many resources we continue to cultivate and update for you. Our mission is to bring the private markets to the public, with educating the masses as a key tenet in our journey towards doing so. With this newly redesigned and strengthened Knowledge Center, we hope that you are empowered to explore the world of private markets, of pre-IPO tech, and of EquityZen.
The end of each year brings with it a sense of familiarity and routine: holidays with loved ones, festive lighting all throughout town, the same old catchy holiday songs seemingly everywhere you turn… and year-in-review content. So much recap content.
In this spirit, we wanted to give our version of this style of content in the form of a blog-year-in-review. That is, a look back at some of our most popular pieces from the year. In a world of tech that has never been faster and a news cycle that has never been more sporadic (and exhausting), we hope you can kick back on the couch with a beverage of choice and enjoy some of our most popular blogs of 2018.
1. SoftBank: An Endless Reservoir of Dollars and Intrigue
Have you heard of this Japanese fund called SoftBank? Oh you have? I suppose when you raise $100B, you might warrant some attention… In late August, we released an in-depth report on SoftBank. The analysis was chock full of interesting research, including gems such as the following:
"Even at a more modest 20% hurdle rate, the Vision Fund will need to return almost $23 billion in realized equity value per year after the fund’s investment period. Including the annual interest payments, this equates to roughly the GDP of El Salvador every year over this period."
Though we released our 2018 IPO Outlook in December of 2017, many of you were excited to read our mid-year update which detailed what we got right, what we may have missed, and any new insights we had for the remainder of the year. The IPO Outlook is a staple here at EquityZen, and so we were thrilled to see that your excitement continued on through to the new 2019 IPO Outlook. Others were watching too, as our 2019 IPO Outlook was picked up by many major networks, including our 4-part series on Yahoo! Finance.
Download the full 2019 IPO Outlook here. Read the 2018 IPO Outlook Update here.
3. Value Private Companies the EZ Way
At the end of Q3, we let you all under the hood and gave you a complete guide to how we value private companies. Our Research Team uses these methods when reviewing the many pre-IPO companies that come across our platform, and now you can use these techniques when reviewing our offerings, company valuations, or simply for your own entertainment (though, if valuing private companies is your idea of entertainment, then check out our Careers page because we should talk!)
Remember Spotify IPO’d this year? We know, it seems like just yesterday Napster was a thing. Well maybe not Napster, but hey, vinyl is back so is anybody really sure what year it is in the music industry? In April, Spotify opted to eschew the standard IPO process and instead list directly onto NYSE in what many referred to as a “non-IPO.” We broke down the difference between an IPO and Initial Public Listing, as well as what the success of this style of exit would mean for the future of the private and public markets.
Thank you to all of you for continuing to support EquityZen as we strive to bring liquidity to early startup employees, access to investors, and education materials on the private markets to the greater internet populous. We hope you’ve enjoyed our EZ Meditations over the course of the year and we look forward to bringing you even more content in 2019! And from all of us here on the EquityZen Team, we wish you a sincere Happy Holidays and good fortune in the New Year!
Investment opportunities posted on this website are “private placements” of securities that are not publicly traded, are subject to holding period requirements, and are intended for investors who do not need a liquid investment. Investing in private companies may be considered highly speculative and involves a high degree of risk, including the risk of substantial loss of investment. Investors must be able to afford the loss of their entire investment. Please click here
for a more detailed explanation of the risks involved by investing through EquityZen's platform.
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