In the last 30 days nearly a dozen tech companies have IPOd, including, most recently, Yext, and also Cloudera, MuleSoft, Okta, and many more. I know there has been a lot of chatter in the past few years about a “tech bubble.” Does this dispel that rumor and validate these companies, their revenues, and their user growth? Or is it more fuel on the fire?
This is nothing like the 2000 bubble. That bubble was fueled as the only way the companies could get more capital due to a smaller venture market and lack of other liquidity options. Now, there are huge companies at huge valuations (such as Uber) that have been effectively public for some time because of a secondary market in private shares. These companies are significantly stronger than in 2000. The number of current IPOs reflects institutional money looking for a way in and venture funds looking to generate liquidity for themselves. There is so much venture cash available (except for all of us) that they are not being pressured except by themselves. However, take each IPO on a case by case, non-biased basis before assuming each, or the aggregate, are indicative of a bubble.
Janet Yellen of the Federal Reserve have signaled (in the Fed's typically cryptic fashion) that they are moving to maintain the status quo in this financial environment instead of implementing any QE. This for IPOs means that access to easy, near-0% interest rate currency that many have relied on will not be available in the coming future. This is fueling the rush to get their IPOs out before that window closes.
The 'tech bubble' is more about the Unicorns that are keeping invested capital locked up because they aren't going public. The system works when capital invested generates multiples of capital out, to be reinvested. Having a healthy IPO market in tech would be a good thing. B-rounds have been harder to come by, and IPOs are a valid alternative for creating investor liquidity.