Why don’t private startups with billion dollar “unicorn” valuations go IPO now?

As of 2015 June, there are a lot of ways to tell the story underlying the factors why:

1. more companies have become +1 Billion USD valuated companies
2. companies have decided to go public later

Unprecedented participation in the marketplace

In the past five to eight years, we’ve been seeing an amazing range of participation – especially in Asia – from not only the higher stack investors traditionally based from the PE and IB school but also corporate investors – present company included…

I make the joke that Fidelity invested in Snapchat, a company still known for dick-pics and college mistakes never to be told again – unless someone captures it on the many of the third party apps in market. If this was a good five years ago, these funds would have manifested these actions through LP investments but now we’re seeing something very different in the behaviours of said entities.

Change in investor and founder dynamic

This movement has really changed the interaction dynamic between the investors and founders.

Before, you would have seen the conversation of a founder trying to raise XXX MM USD with commercial VCs as talking about how to frame the valuation story based on metrics such as revenue, users base, session time, etc in line with syndicate competition, market temperature, etc.

Don’t get me wrong, this still happens but we now have material entrance from corporations/large financial organizations not traditionally from the VC asset class asking not necessarily about the company’s revenue/growth but more so about how much they would want for X% – for ‘strategic purposes’ – of their company; this has become not an uncommon site.

This sort of action has been a very strong driving force in valuation increases across Asia as of late – above is SoftBank’s push but there are other more segmented examples readily available online.

Availability of very liquid secondary market

With the above, we see increased opportunity creating mini-cash-out events in funding rounds that would have been a deal-breaker years back now something that is all but normal.