M&A activity held steady while IPOs continued to decline in Q1'20. We take a closer look here.
An infusion of private capital into the US startup ecosystem has shifted startups’ paths to exit.
The so-called “private IPO,” in which private tech companies raise $100M+ equity financings, has increasingly replaced the traditional public IPO. As private IPOs comprise a growing share of total funding, more startups are putting off the prospect of going public.
In Q1’20, IPO activity for US-based startups remained level on a year-over-year (YoY) basis, though it saw a 25% decline from Q4’19. With 15 IPO transactions, Q1’20 marked the third consecutive quarter of declines since the peak in Q2’19.
IPO activity spiked in Q2’19 as several high profile private companies, including Uber, Pinterest, Slack, Zoom, and CrowdStrike, sought to capitalize on a soaring public equity market.
The subsequent outbreak of Covid-19 caused equity markets to plummet, diminishing fundraising prospects and eliminating IPO plans for several startups in Q1’20.
The largest IPOs in Q1’20 were in the healthcare sector, covering primary care, drug R&D, and biotechnology.
San Francisco-based One Medical Group raised $262.5M in its IPO at a $1.8B valuation. The company operates a membership-based primary care practice that offers same-day in-office or remote appointments and 24/7 video conferencing with care providers.
Revolution Medicines raised $238M in its February 2020 IPO. The California-based precision oncology company develops new cancer therapeutics.
Meanwhile, M&A activity for VC-backed companies in the US has declined since its peak in Q4’18. This corresponds with fewer acquisitions by big tech firms such as Facebook, Apple, Amazon, Microsoft, Google, GE, Intel, Oracle, Cisco, and IBM.
The Covid-19 outbreak had little impact on US M&A activity in Q1’20: M&A transactions dropped 7% YoY, but remained nearly stagnant compared to Q4’19.
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Take a look at all the underlying data and more insights in our PwC / CB Insights MoneyTree Report™ Q1 2020.
This report was created with data from CB Insights’ emerging technology insights platform, which offers clarity into emerging tech and new business strategies through tools like:
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