ANALYSIS: Where Did the IPOs Go in the Silicon Valley 150?

In each of the past two years, only two IPOs have made it onto the annual Fenwick–Bloomberg Law SV 150 List of the largest Silicon Valley technology and life sciences companies.

One of the IPOs on the 2023 list—Maplebear Inc., doing business as Instacart—was a big beneficiary of the pandemic, with people deciding to avoid the supermarket in favor of home grocery delivery.

The other IPO making the SV 150 for 2023 is also emblematic of our changing times. NEXTracker Inc. went public in February 2023 with an upsized offering, an indication of high demand that leads a company to increase the number of shares to be sold. It is a provider of solar tracker technologies for solar energy projects around the globe.

The past few years have been unusual times for people, for companies, and for markets, which can make identifying genuine trends difficult. The pandemic, and responses to it, upended a multitude of long-standing behaviors, helping companies like Instacart and NEXTracker while, at least temporarily, hurting businesses such as movie theaters and commercial real estate firms. Still, the question must be asked: In a region that has been the cradle for so many garage-to-global companies, what is causing so few initial public offerings to make the list lately?

IPO Market Down, Reducing Pool of Potentials

The most straightforward answer is that there have been far fewer companies, both in Silicon Valley and across the US, going public recently because the market has been so cold. The hot pandemic market for IPOs ended in late 2021, leaving potential IPO companies facing a market stuck in an unforgiving deep freeze. That freeze has started to thaw in 2024—but any improvement will not be reflected in the List until next year.

The nationwide IPO count in 2023 (169) represents a drop of over 84% from 2021’s count (1,090).

When the IPO market is in a funk, it is not simply the number of companies deciding to list on an exchange that plunges. The tepid reception that most new issues face during a bear market also forces companies to shrink their planned offerings and lower the offering price, sometimes repeatedly. Some offerings may get pulled altogether. Larger companies that can afford to wait for a warmer market welcome often do. This results in lower valuations and/or smaller market capitalizations and far fewer companies going public, substantially reducing the number of newly public companies with the potential to make the SV 150 in a given year.

That phenomenon appears to be reflected in the table below.

Mathematically speaking, looking at the bar chart and the table together, there appears to be a rough correlation between the IPO market’s overall performance and the number of companies making the SV 150 in their first year with a public listing. If the 23 IPO SV 150 companies on the 2021 version of the list were reduced by the 84% drop in the overall IPO market that occurred over the following two years, we would expect a total of only three IPO companies to make the SV 150 in 2023. There were two.

Has the Mix of SV 150 IPOs Changed?

The industries of the companies making the Silicon Valley 150 as IPOs have changed in recent years. In slow IPO market times, like 2022 and 2023, the small pool of newly listed companies with a large enough total revenue in 2023 to make the SV 150 list inevitably alters the industry sector mix that one typically sees in stronger markets.

Looking at the mix of industry sectors among the SV 150 in the year that a newly listed company made the list, we can see that tech companies have led the way—at least up until recent years.

During the peak IPO year of 2021, the SV 150 saw a robust mix of companies coming from seven of the 10 Bloomberg Terminal industry sectors: technology; consumer, non-cyclical; communications; financial; consumer-cyclical; industrial; and even (alternative) energy. That mix compressed in 2022, squeezing out most industries and leaving just one consumer, cyclical (home furnishings) and one technology (audio/video products) company in 2022, and one industrial (electronics measuring instruments) and one communications (e-commerce) company in 2023.

There do not appear to be any discernible trends to identify from the changing mix of industry sectors represented among SV 150 IPO companies since 2021, because there are simply too few years (two) and too few companies going public in those years (also two) to provide meaningful data.

Comparing the SV 150 IPO Dates to the Dow 30

After considering the reasons for fewer IPOs making the SV 150 in recent years, it may be helpful to keep in mind that the SV 150 is already a list of much younger companies compared to many other indices, regardless of how many IPOs make the list in a given year. Perhaps nowhere is this more apparent than when comparing the 2024 SV 150 to the venerable Dow Jones Industrial Average, which is comprised of 30 blue chip companies. The SV 150 is comprised of much younger companies, on average, than the Dow 30, as seen in the chart below (although some companies appear in both lists).

Many companies in the current Dow 30 went public in the post-World War II decades, but none have done so in the 2020s. The SV 150 tilts heavily toward recent years, with 66% on the list having gone public in just the last 14 years (2010–2023). In comparison, only 3.3% of the Dow 30 went public in 2010 or later.

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In other analysis articles covering the results of the 2024 Fenwick–Bloomberg Law SV 150 List:

• Colin Caleb focuses on the Top 10, especially NVIDIA’s rise to No. 4 on the list;
• Abena Opong-Fosu assesses the state of M&A activity among the top 10; and
• Emily Rouleau takes a closer look at the newcomers to the 2024 list.

Bloomberg Law subscribers can find related content on our Equity Deal Analytics page and on our Securities Practice Center resource.

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