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The IPO Market Is Stirring, but at ‘Down-Round’ Valuations
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By Yuliya Chernova, WSJ Pro
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Good day. Venture-backed tech companies are gearing up to go public again, after a halt caused by the global trade war and the ensuing market jolts. But those startup debutantes are still likely to be priced below their private valuations.
Ad-tech company MNTN, pronounced “mountain” and based in Austin, and digital startup Hinge Health, of San Francisco, are slated to list on the New York Stock Exchange on Thursday. Expected in a few weeks is the public debut of consumer banking company Chime Financial, which revealed its registration documents last week and would be the biggest VC-backed IPO of the year, according to Renaissance Capital, a provider of pre-IPO research and IPO-focused exchange-traded funds.
“We’ve come a long way since the dark days of early April,” said Matthew Kennedy, senior strategist at Renaissance Capital.
In a positive sign, Israeli stock and crypto trading platform eToro, backed by Spark Capital, saw its shares jump in its listing last week, though they have retreated from their first-day closing. Meanwhile, the share price of CoreWeave, an AI infrastructure company, more than doubled since its IPO in March. (The company’s largest investors weren’t venture firms, but it did have some venture backing.)
“Amazing what a month can do,” said Michael Gilroy, founding partner at venture firm Marathon Management Partners. One of his portfolio companies is now rushing to get ready for an IPO, he said. “Positive momentum for sure,” he added.
New listings, however, are unlikely to clear the snow-capped private valuations that tech companies reached during the market boom a few years ago. The prospects of such “down-round” IPOs have kept some tech names away from the public markets.
MNTN and Hinge Health are expected to price their initial offerings below their last venture-capital valuations. Hinge plans to go public at a $2.9 billion market cap, according to Renaissance; that would be less than half its valuation in a 2021 round led by Coatue Management and Tiger Global. MNTN, meanwhile, expects to go public at a $1.3 billion market cap, per Renaissance; the company was valued at more than $2 billion in 2022, according to research firm PitchBook Data.
Read the rest of the story at this link.
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And now on to the news...
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Austin has seen a decline in both Big Tech and startup employment, a report from SignalFire says. PHOTO: BRANDON BELL/GETTY IMAGES
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Austin loses steam. Nearly five years after Austin, Texas, became a darling of the tech industry, luring companies out of California with the promise of lower taxes and a better quality of life, the city is now bleeding tech talent that is flowing back to the coasts, The Wall Street Journal reports.
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A new report from venture-capital firm SignalFire shows that in 2024 Big Tech employment declined 1.6% in Austin, and startup employment fell 4.9%. Tech employment in Dallas and Houston also declined, along with cities like Denver and Toronto. Tech employment grew, on the other hand, in New York and San Francisco.
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It is a shift from five years ago, when Texas seemed like a growing Sunbelt beacon for tech, luring companies like Tesla, Hewlett Packard Enterprise and Oracle from California, and inspiring a number of remote tech workers and startups to follow them. But many of those companies have since laid off workers and Oracle actually relocated from Texas to Nashville, Tenn.
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9
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The number of venture-backed companies that went public in the U.S. this year, down from 11 in the same year-ago period, according to Renaissance Capital. No American tech company with a large ownership by venture investors has gone public this year yet.
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The Tech Industry Is Huge—and Europe’s Share of It Is Very Small
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The world’s technology revolution is leaving Europe behind, WSJ reports.
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Europe lacks any homegrown alternatives to the likes of Google, Amazon or Meta. Apple’s market value is bigger than the entire German stock market. The continent’s inability to create more big technology firms is seen as one of its biggest challenges and is a major reason why its economies are stagnating. The issue is even more urgent with the prospect of higher tariffs threatening to further curb economic growth.
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Investors and entrepreneurs say obstacles to tech growth are deeply entrenched: a timid and risk-averse business culture, strict labor laws, suffocating regulations, a smaller pool of venture capital and lackluster economic and demographic growth.
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OpenAI’s Biggest Data Center Secures $11.6 Billion in Funding
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A Texas data center that the startup Crusoe is building for OpenAI has secured $11.6 billion in new funding commitments, expanding a site that is core to increasing the ChatGPT maker’s long-term computing capabilities, WSJ reports.
The funding, a mixture of debt and equity, will expand the data center to eight buildings from two and increase the total amount secured for the project to $15 billion, Crusoe said. Both Crusoe and investment firm Blue Owl Capital are contributing cash to the data center project as part of the latest financing.
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Funds
Factorial Funds launched its second institutional fund with $200 million in commitments to focus on investments across the AI value chain, cloud and data infrastructure, robotics and rapidly scaling software. The new fund has a hard cap of $500 million.
Headline Asia raised $145 million for its fifth fund to back startups in Japan, Taiwan, Southeast Asia and South Korea focusing on e-commerce, logistics, fintech, IP and AI.
Consumer internet-focused Creator Ventures secured $45 million for its second fund, which is more than double the amount the New York-headquartered firm raised for its inaugural vehicle.
People
Autonomous aircraft systems provider Reliable Robotics appointed Marc Stoll as chief financial officer. He was previously a partner at Eclipse Ventures.
Industrial AI company Cognite named company co-founder Geir Engdahl as chief technology officer and James Sirota as global head of engineering.
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Gravitee, a Denver-based agentic API and event-management company, scored $60 million in Series C funding. Sixth Street Growth led the investment, with Managing Director Michael Bauer joining the company’s board.
Novisto, a Montréal-based startup specializing in ESG data management and sustainability reporting, secured $27 million in Series C financing led by Inovia Capital.
Keep, a Toronto-based financial platform for small businesses, emerged from stealth with $23 million in equity financing led by Tribe Capital, alongside a $50 million credit facility and a $3 million venture debt line.
Sweep, an agentic workspace for business systems, landed $22.5 million in Series B funding led by Insight Partners. The company has offices in Tel Aviv and New York.
FanBasis, a Miami-based all-in-one payment, fulfillment and business infrastructure provider for digital businesses, collected $20 million in Series A funding led by Left Lane Capital.
Catena Labs, a Boston-based startup building a financial institution to serve the emerging AI economy, picked up an $18 million seed investment led by a16z crypto.
TrustCloud, a startup that automates risk and compliance assessments, grabbed $15 million in strategic funding led by ServiceNow Ventures.
True Markets, provider of a stablecoin-native DeFi trading mobile app, raised $11 million in Series A funding co-led by Accomplice and RRE Ventures.
Parkade, a San Francisco-based technology platform for managing private parking, scored $10 million in Series A funding from investors including Navitas Capital, MassMutual Ventures, 9Yards Capital and CRV.
Seeds, a New York-based startup providing an investment-management system for advisers, completed a $10 million Series A round led by Portage.
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Fidji Simo will join OpenAI this summer. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
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Calpers, Calstrs CIOs see shift away from U.S. assets amid market turmoil (Private Equity International)
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You won’t find these on the shelf. Newspapers print an AI-generated reading list with fake books. (NiemanLab)
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