Findings from Silicon Valley: IPO and Capital Markets

Findings from Silicon Valley: IPO and Capital Markets

Seppo Heikura, a member of the Boardman Grow network and an experienced Board Professional and Investor, shares his key takeaways from the Boardman Grows Silicon Valley experience in 2023.

Time to write some notes about the findings from my recent trip to Silicon Valley with Boardman Oy and a brilliant group of fellow explorers.

 

 

During breakfast, participants received insights into IPOs and current markets from Alan Jones (Managing Partner, PE Lead, and National TMT Deals Leader) and Eric Watson (Deals Director). They discussed about market developments and future prospects.

During breakfast, participants received insights into IPOs and current markets from Alan Jones (Managing Partner, PE Lead, and National TMT Deals Leader) and Eric Watson (Deals Director). They discussed about market developments and future prospects.

 

Time to write some notes about the findings from my recent trip to Silicon Valley with Boardman Oy and a brilliant group of fellow explorers.

September 11th we had pleasure to visit PwC and meet Alan Jones & his colleagues. Few observations complemented also with my own thoughts arouse from that exellent meeting:

  • About 18 months ago IPO market was bullish and declined heavily from tops reached during 2021.
  • Some indications towards change to better has been seen lately.
  • Also private equity has been rather inactive.
  • Tech multiples are moving towards means.
  • Falling stars are now taken to private.
  • Yet stock market (like Nasdaq) near all time high.
Nasdaq last 5 years.

Nasdaq last 5 years.

 

  • VIX index illustrating the ”fear factor” of the market has been declining. Though some modest growth after our visit can be seen due to world politics.
  • Companies are actively decoupling from markets like China to minimize their risk position. Earlier naturally same approach has been taken toward Russian market with better or worse success.
  • Funds in general are seeking safety, which increases the precision of selecting the targets.
  • This impacts directly also to multiples where deviation is increasing depending the ”quality” target company. In example where top 10% is reaching 12x multiples, top 25% might reach 9x and median could remain as low as 3x.
  • It is also good to notice that multiple differences are diminishing in this market. Where as 2021 top 10% got 35x vs median of 6x, now those extremes are much closer. So it seem that best (or most hyped) companies suffer much morefrom this current market situation than average companies.

Source: CapIQ / PWC

  • From individual company point of view this could lead into situation, that even if funding is available it might be reasonable to consider whether timing is favourable or not. It seem like investors market now and opportunity to seek low points of valuations.
  • As summary one could say that it is tricky time for rising capital whether through IPO or from VC/private equity sources.
  • Good companies will get funding, but from founders point of view you need to be carefull to get the price fear, which is more challenging than during bullish times.
  • Good investors will now find good targets with reasonable valuations. They naturally need to be prepared for follow up investments to keep scale-ups moving over this slower market.

Story continues. During coming few weeks I will summarize some of other topics from company visits that catch my eye during this incredible visit to the epicenter of innovation and start-ups.

AN UNFORGETTABLE EXPERIENCE

The Boardman Silicon Valley Experience 2023 was an unforgettable journey into the world of technology and innovation. Participants had the opportunity to learn, network, and be inspired.

Thanks to all participants and organizers for this memorable experience. The next Boardman Silicon Valley Experience is already around the corner.

Read more and sign up to Silicon Valley Experience 2024 here!

Text: Seppo Heikura.