“Beyond the 2020 IPO”

After the pandemic took global effect there was a short lull of IPO’s from February through May of 2020. As the fiscal and monetary stimulus began to roll out, the wavering market became steadfast as the build-up of nearly 500 Late-Stage Private Equity compounded with eager investors. By the end of December, 2020 had broken 2000’s record IPO by 20%.i  What began as one of the slowest years on the stock market rebounded to a record breaking year for public offering and pre-IPO investors. 

Late-stage pre-IPO is one of the fastest growing asset classes, a market historically reserved for institutional investors with large endowments. Through reformed regulations a wider group of investors can now participate in this burgeoning asset class. InvestX Capital, a leading private equity marketplace that empowers broker-dealers to trade in Late-Stage Private Equity, has been on the forefront of innovation in this asset class.    

Recounting the 2020’s, it was a robust year for pre-IPO investors as many unicorns went public, including Airbnb and Palantir. InvestX has put together a case study which exemplifies how the investment contributed to impressive returns for investors. Palantir offered its stock to the public on September 30th with an initial valuation of about $22 billion and a price of $10 per share. In January, the stock passed $35 per shareii, more than tripling since it went public. InvestX clients were able to generate favorable returns on their investment. Read the full Palantir case study here.   

Forwarding to 2021, Late-Stage Private Equity in our portfolio such as SoFi and 23andMe are planning to go public via SPAC. SPACs provide an alternative option for companies to go public while offering management teams different benefits over the traditional IPO process. SPACs are an increasingly popular vehicle, taking more and more companies public.  In recent years, SPACs have attracted big-name underwriters and investors while raising a record amount of IPO money in 2020. Fintech start-up SoFi will merge with a SPAC backed by venture capital investor Chamath Palihapitiya, Social Capital Hedosophia Holdings V Corp (IPOE)iii. Palihapitiya has taken multiple companies public via SPACS, including Virgin Galactic and Opendooriv. And, 23andMe is set to go public via VG Acquisition Corp. a vehicle set up by Richard Branson and his company Virgin Groupv.

With the increasing popularity of SPACs, we anticipate more of our portfolio pre-IPOs to take a swift leap to initial public offering in 2021.