It has been a tough two years for IPOs. Few of the big names going public in 2020 and 2021 have shown any growth, which perhaps is hardly surprising given the environment that they were listing in.
Examples include Airbnb, down 71% since its February 2021 listing; Bumble, down a massive 51% in the same period; Petco, down over 24% since January 2021, and RobinHood, down 32% since July 2021.
In fact, of the most anticipated IPOs of 2021, only Nextdoor has fared well, currently trading at 6.7% above its March 2021 listing price.
What does that mean for IPOs in 2022?
Companies still need access to the markets, and if the number of unicorns over the past five years is anything to go by, venture capitalists will still need to cash out. 2021 was a lesson for investment banks, however.
As much as they will continue to try and tempt companies with higher IPO valuations, they’re bound to be somewhat reticent after the last two years.
We, at DealRoom, help many companies prepare for the IPO by providing tools and pre-built IPO playbook, and below, we look at some of the highlights for the coming year.
The Biggest IPOs of 2022
- Stripe: Estimated valuation: $100 billion.
- Instacart – Estimated valuation: $50 billion.
- Databricks: Estimated valuation: $40 billion.
- Discord: Estimated valuation: $15 billion.
- Chime: Estimated valuation: $15 billion.
Estimated valuation $100 billion.
In April 2021, Stripe became the most highly valued venture-backed private company in the world, coming in at a valuation of $95 billion in its Series H funding round.
Stripe was founded by brothers, John and Tom Collison, who still head up the business. John recently stated that the company was ‘very happy’ being private.
However, he’s unlikely to be the only one making the decision, with several investors spread out over those rounds probably keen for cashing out at some stage.
For every $100B in transaction value, Stripe now processes nearly $3B, adding its own transaction fee. Growth last year was 70%. It may not happen in 2022, but expect it to be by far the biggest IPO in the world if it does.
Estimated valuation $50 billion.
Instacart was one of the most anticipated IPOs of 2021 and ended up not happening as the owners said that it was more important to ‘focus on growth’ and ‘broadening its services.’
Again, there’s a good chance that they took at how other IPOs fare and thought better of it.
That said, revenue growth at the company, which exploded during the pandemic and is set to rise by another 10% in 2021, suggests that there’s a lot more runway to go before an IPO is required. Also, the company is responsible for a massive 75% of third party intermediary grocery sales in the US.
Don’t be surprised to see Instacart acquire a supermarket chain as it seeks to branch out, maybe learning from some of Amazon’s mistakes with its Whole Foods acquisition some years back.
Estimated valuation $40 billion.
Databricks’ most recent funding round valued it at $38B. Founded by the creators of Apache Spark, it is the first platform to allow users to perform traditional SQL analytics and BI, with data science and machine learning all on the same platform without involving SQL manager.
Its revenue has been projected at $421M in 2021, which makes the $40B valuation a steep one, but the company’s growth remains remarkably high, growing ARR by 75% in the past year – the metric that everybody valuing SAAS companies focuses on.
At $40B, this could be the third biggest IPO of the year, but may even end up being the biggest if the Stripe and Instacart listings are delayed once more.
Estimated valuation $40 billion.
Bank executives everywhere must be worrying about the number of digital banks enjoying huge success.
Chime – which grew its user base through fee-free mobile banking services – is actually owned by a traditional bank, the Bancorp Bank, itself a respectable, but otherwise unremarkable bank with revenues of less than $300M.
Its startup, Chime, is already earning around three times that – perhaps a classic Kodak moment for the Bancorp Bank, that it gets to take advantage of.
Like other companies on this list, Chime has been a big beneficiary of transactions moving online during the Covid-19 pandemic and saw its revenues skyrocket over the past two years.
The IPO has been earmarked for March 2022. With a valuation of $40B, Chime would be more valuable than several US regional banks, each of which has several hundred branches.
Estimated valuation $15 billion.
Discord is usually compared with Slack, although at half the valuation, it’s got far fewer users, and a much smaller ecosystem to tap (Salesforce has been highly active in this space over the past two years, as we’ve previously outlined).
The other thing about Discord is that it’s far more B2C than B2B, perhaps leaving it open to a much wider audience (but also, a much more crowded field of competitors). It’s a favorite among the gaming community, for example.
The company grew from 56 million monthly users to 100 million in 2020, and then by a further 50 million over the course of 2021. But it will have to keep that kind of growth up to justify a $15B valuation on current revenues of just $130M.
If you are interested about the best IPOs of 2021, read down below.
The Biggest IPOs of 2021
- Bumble – estimated Valuation: US$6-8 billion
- Petco – Estimated Valuation: US$6 billion
- Nextdoor – Estimated Valuation: US$4-5 billion
- RobinHood – Estimated Valuation: $8-10 billion
Estimated Valuation: US$6-8 billion
The world’s second favourite dating app has already hired Goldman Sachs and Citigroup to underwrite its IPO at the beginning of 2021.
The 6-year old company already has in excess of 100 million users, many of which subscribe for added services on its mobile application, giving it large recurring revenue.
Private equity group Blackstone took a majority stake in MagicLab in 2019, obviously with one eye on a listing in the short-term.
This IPO will undoubtedly be closely watched by Tinder, the biggest player in this market, who are also rumored to be eying an IPO in the coming years.
Estimated Valuation: US$6 billion
The pet supplies industry is booming. As couples postpone the decision to become parents for longer and longer, the tendency over the past number of years has been for domestic pets to fill the void once filled by children.
And best of all for investors, it’s a highly defensive industry: People don’t stop feeding their pets, even in an economic downturn. That’s why the listing of Petco in 2021 will be so keenly watched.
With its network of over 1,500 retail locations, the company is well positioned to capitalize on the thriving domestic pet economy.
One note of caution, however – this isn’t their first rodeo: Petco has already listed in 1994, 2000 and 2002. Fourth time’s a charm.
Estimated Valuation: US$4-5 billion
An IPO for Nextdoor has a vague feeling of one of those IPOs at the beginning of the 2000s for technology firms with few little cash flow and lots of big promises.
However, move forward twenty years and social media is a viable business model. Nextdoor is a social media platform aimed at neighborhoods, allowing users to make connections (the second company on this list to do so), making and requesting recommendations, buy and sell items and advertise goods and services for sale.
The site is already active in over 250,000 neighborhoods across 11 different countries, and has the potential to move into several directions, including last-mile delivery, home sales and ecommerce.
Estimated Valuation: $8-10 billion
The legend goes that the original Robin Hood, “robbed from the rich and gave to the poor.” That’s not quite the proposition of RobinHood, although it does put stock trading – traditionally out of reach for many – at the fingertips of the masses.
The inspiration for the company came to its founders during the Occupy Wall Street protests some years back when they thought that investing needed to be democratized.
The result is the world’s most popular stock trading application.
However, with many of the big firms in the banking industry now offering almost identical products to their own customers, and often with 0% commissions, it may be difficult to convince investors that this is a solid long-term investment.
All the signs are that 2021 will be a big one for IPOs. But it’s not just mega deals. Hundreds of firms are also gearing up to list on indices across the world, many of them DealRoom clients.
The IPO process is a maze of documents and filings which requires good IPO virtual data room services.
Talk to us if you’re considering an IPO in the near future about how DealRoom can help you and your company to simplify the process and ensure that your firm achieves as high a valuation upon listing as possible.
Product updated ·
May 26, 2022
· 4 min read