Hungry investors’ coffers are overflowing with more than $900 billion they’re eager to feed to startups despite an overall track record of poor stock market performance, puffed-up valuations and a road to profitability marred with potholes.
Publicly traded startups have cost investors billions in value, but that hasn’t dampened the enthusiasm of finding the next tech star that will make headlines and become a household name or corporate necessity.
Bank-related initial public offerings led the way by segment, with 66 in 2021 through Dec. 16, according to PYMNTS data. There were 40 payments platforms that went public and 58 firms working on the backend of how enterprises operate. But there is still time for more filings before the year closes and plenty of time — and money — for 2022.
Read more: Platform Businesses Dominate End of Year SPAC, IPO Activity
Private equity funds have over $312 billion available; general venture funds about $260 billion; SPACS, $156 billion; early-stage venture, $136 billion; and late-stage venture, 40.5 billion; according to Wall Street Journal data based on Preqin and SPAC Research on Tuesday (Dec. 28).
Since investors seem to be looking the other way when it comes to drops in share prices, it’s anticipated that there will be plenty of cash available for startups in 2022 and 2023, per the report.
However, if interest rates start going up in the coming years as forecasted by analysts, the attraction of risky startup investments could fizzle.
Read more: 49% of 2021 High Profile IPOs Trading at Below Listing Price
Almost half of the startups that raised $1 billion for IPOs in 2021 were trading below their listing prices at the end of last month, PYMNTS reported.
About three-quarters of the 200 companies that went public via a SPAC are trading below their listing price, according to SPAC Research, per the WSJ. Close to 40 firms wiped out over half of their value, per SPAC Research.
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Mike Ryan, CEO of Bullet Point Network, a financial analytics company, told the Wall Street Journal that although there is plenty of available capital, “the problems are caused by bringing the wrong company public or the wrong valuation,” he said.
Ryan is a former Wall Street equity investor, a venture partner at Alpha Partners, and board chair of a SPAC launched by Alpha Partners.