How VCs from CapitalG to Northwest are dealing with a lifeless IPO ground: ‘We’re not here to spend weeks in the market’

The so-called “age of unicorns” has given way to the bitterness of society’s markets, which Luck The “Age of Unicorps” was explained in a secure story in January. With rising interest rates and regulatory crackdowns on unhealthy acquisitions, all the companies that were able to invest billions are now finding themselves struggling to reach a breakthrough outcome, many in the face of a less forgiving financial base. Are in. ,

But LuckAt the Brainstorm tech conference on Tuesday, a panel of top investors from companies including Google’s spin-off investment company CapitalG and multi-billion-dollar company Norwest noted how they’re dealing with ancient truths and whether the IPO market could re-emerge. Will not remain hidden. In the following few years. The findings were mixed, with most agreeing that the busy days of 2021 created unrealistic and irresponsible expectations for startups. “We are not here to time the market,” said Renata Quintini, co-founder and managing director of Renegade Companions.

To do IPO or not to do IPO

Time 2021 saw a hot market for SoC options, as interest rates increased as interest rates increased and buyers turned to safer bets like Treasuries. As a result, the best strategy for tech companies to IPO disappeared as an option.

Jill Greenberg Chase, partner at CapitalG, said the situation appears to be thawing due to the good fortunes of new tech IPOs, including Reddit and Rubrik, whose shares remain above their initial price. “We need more of these,” he said. “Until we see more datapoints, we won’t see an IPO market until early 2025.”

Even that timeline may be too rosy. Jai Das, co-founder and chairman of Sapphire Ventures, said he doesn’t think the worst is over, with companies still flush with cash due to the project craze of 2021 and 2022, but they are looking to attract more cautious investors. Are not producing the required numbers. Social market. In turn, he predicted that tech companies will continue to turn to private equity firms, which can pay much lower multiples than those traditionally pursuing mission companies.

Another strategy—mergers and acquisitions—has also stopped due to regulators’ more stringent stance. Both the Justice Department and the Federal Industry Commission have offered additional scrutiny to proposed mega-deals, including Adobe’s deliberate $20 billion acquisition of design tool maker Figma, which it rejected in late 2023. “It definitely stifles innovation,” Quintini said.

on Sunday wall boulevard magazine Google was reported to be in final-stage discussions to acquire cybersecurity company Wiz for $23 billion. If successful, it could signal the return of the business M&A marketplace, even if panelists on Tuesday expressed cautious optimism.

Despite the hard ground, the VC certainly said that a more sensible solution to the expectations of portfolio companies could prevail over a more fit tech ecosystem, especially as corporations look for cloudless paths to sustainable earnings in the future. Throwing huge amounts of cash at startups without. The market collapsed. “Naturally, there’s going to be a hangover,” said Lisa Wu, Norwest’s wife.

The only exception is AI, with companies dominating it still capturing 2021-sized valuations. Without a clear understanding of what the overall addressable market, or TAM, of AI products might be, Chase said she is looking for “what you should believe in the math” or trying to understand the underlying metrics of businesses and how. They can grow to justify the investment round. “This technology has a lot of potential,” he said. “It’s a completely different paradigm of how we’re thinking about market size.”

Ultimately, the AI ​​market is rapidly evolving, both with respect to the potential of the era as well as the desires of customers, said Matt McIlwain, managing director of the Madrona Challenge team. He said that the startups that work on dominating these AI features and provide real value to consumers will be discovered in the later part of AI Day.

Google’s Gemini McIlwain said that currently a lot of people are considering big language models like OpenAI’s GPT, but the most influential AI fashion “is the business model.”

Learn additional security from Brainstorm Tech 2024:

Wiz CEO says ‘consolidation is really a necessity in the security market’ as news of $23 billion Google acquisition comes in

SF Fed Holds Leading Mary Daly: AI Has Replaced Duties, No Longer People’s

Experts fear US-China cold war could rage: ‘Everyone is waiting for pressure to ease in Asia’

CEO Daily provides important reference for internal track leaders who want to know how to trade internationally. Every weekday morning, more than 125,000 readers rely on CEO Daily for inside information about and from the C-suite. Subscribe now.