Last month, British mobile chip design house Arm Holdings, grocery delivery operator Instacart and marketing-automation firm Klaviyo listed within days of each other amidst hope that their back-to-back successful IPOs will open a floodgates of new listings from the much vaunted AI firms like Open AI and Anthropic.
A month ago, it looked like tech IPOs were finally coming back after nearly a two-year hiatus. The enthusiasm for new listings was seen as a good thing for the next wave of start-ups from artificial intelligence and machine learning to fintechs, enterprise software as well as genomics and venture capital (VC) firms that back them.
With interest rates rising from near zero to 5.25% between March 2022 and August, the last 18 months were the worst period for IPOs in more than three decades. With cost of capital soaring, economies slowing and earnings sliding, investors have understandably shied away from new listings. This year so far, there have been 120 IPOs on US exchanges, down from 164 IPOs in the same period last year.
