The 2020 IPO market faces strong headwinds, including lingering disappointment over some of the biggest public tech offerings of 2019. Into this cloud of uncertainty, Airbnb is set to become the most recognizable name to go public this year.
In 2019, overall IPOs suffered a big drop in numbers, from 192 in 2018 to 159, according to Renaissance Capital’s annual IPO Review. Of those, 42 of the U.S. IPOs came from the tech sector, down from 52 in 2018.
Renaissance says its Private Company Watchlist (PCW) contains 243 companies that could go public in 2020, including 60 that have hired banks or filed confidentially with the U.S. Securities and Exchange Commission. Once again, Chinese companies will likely be actively pursuing U.S. IPOs, including such potential entrants as Ucommune Group, which operates coworking spaces; the Lizhi Chinese podcasting platform; and Phoenix Tree, an apartment rental platform. There is also speculation that ride-sharing giant Didi Chuxing could seek an IPO this year. This would be good news for Uber, which owns 15% of the company.
But while each year presents its own IPO challenges, 2020 appears to have a number of additional variables in play. For one, it’s a presidential election year in the U.S., which could provoke a number of bombshells that send markets soaring or plunging. Trade negotiations between the U.S. and China remain in flux and seem to shift by the day. The belated arrival of Brexit in the U.K. could also impact some companies. And, as always, random events like a potential war with Iran could scuttle all projections.
Looming over all of this is the poor performance of the very biggest unicorns that went public in 2019, and the catastrophe that was WeWork. These factors have already caused some contenders, like Postmates, to scuttle their IPO plans.
As such, Renaissance is projecting 159 IPOs for 2019, with a range of plus or minus 25. That’s roughly in line with 2019.
With the above caveats, here are the 13 U.S. tech companies most likely to go public in 2020:
Airbnb: The couch-surfing startup turned global travel booking platform will undoubtedly be the most hotly anticipated deal this year. This is largely due to its recognizable name and profound impact on the tourism industry around the world.
But after years of being profitable, the company sank into the red after pumping up spending to combat slowing growth and making a number of acquisitions to expand its business. As IPO investors grow increasingly skittish about backing money-losing companies (at least for now), expect some healthy debate when Airbnb makes its prospectus public.
The company may also serve as a benchmark because it is reportedly pursuing a direct listing, which means it won’t raise any money. If so, it would be following in the footsteps of Slack and Spotify. If this strategy succeeds, it could add further momentum to a trend reshaping the industry’s relationship to Wall Street. Indeed, Airbnb is one of six companies on this list alone considering such a move.
Venture capital raised: $3.1 billion
Wish: This company has quietly become a massive ecommerce platform by selling unbranded and discounted stuff to bargain shoppers. It’s a remarkable success in the face of competition from Amazon. Speaking of which, Amazon may have already made overtures to the independent-minded company. The real drama may be whether Amazon tries to swoop in with an unbeatable offer, Walmart tries to snatch it away, or it remains a publicly traded independent ecommerce force.
Venture capital raised: $1.6 billion
DoorDash: This food delivery startup has seen rapid growth but also faces intense competition in a sector that is packed with money losers, including Uber Eats and Postmates. Based in San Francisco, DoorDash still operates primarily in the U.S.
The company has gobbled up some remarkable funding rounds, including a $535 million round led by SoftBank. That’s a kind of good news-bad news situation, as being backed by SoftBank invites comparisons to WeWork and other misfires. DoorDash is also reportedly considering a direct listing.
Venture capital raised: $2.1 billion
Procore Technologies: The construction management software company may not sound sexy, but it has reportedly hired Goldman Sachs to lead an IPO that would could value Procore at $4 billion. Worth noting is that the best performing IPOs of 2019 were the smaller and mid-sized companies with solid businesses. Like this one.
Venture capital raised: $304 million
Casper: This company sells mattresses through its online platform. Oh, and also sheets and pillows. That’s about it. Is it a tech company because it has a website and ships stuff? Dunno. It does have a chatbot. VentureBeat once referred to Casper as a “Nighttime lifestyle brand,” which makes me gag a bit even as I write it. Still, it has reportedly hired Morgan Stanley and Goldman Sachs, so for now we’ll give it the benefit of the doubt and call it a tech company, because why not?
Venture capital raised: $355 million
Robinhood: The startup offers free stock trading through its app, making interest from the money it holds for customers. Its model has been popular with new investors while making Wall Street a bit nervous. There is also some talk it may go the direct listing route.
Venture capital raised: $912 million
Credit Karma: This financial startup provides free online credit reports and financial management tools for consumers. It has been the subject of IPO speculation for years. Most recently, talk was of a 2018 IPO, until Credit Karma raised a large private placement that pushed back those plans. Early last year, its CEO said the company wasn’t then looking at an IPO. Now chatter is picking back up.
Venture capital raised: $869 million
Snowflake Computing: The startup sells database software that runs in Amazon’s cloud and Microsoft Azure to deliver better storage performance. It has been on a fundraising tear over the past two years. It’s another possible candidate for a direct listing.
Venture capital raised: $923 million
GitLab: This one has become an essential tool for many programmers, thanks to its software development and collaboration tools. The company competes with GitHub, which was acquired by Microsoft. But it has made a broader push into the developer workflow, trying to become what the company describes as a “complete DevOps platform.” Interest in DevOps has landed the company two sizable funding rounds in the last two years.
Venture capital raised: $436 million
Asana: Founded by former Facebook cofounder Dustin Moskovitz, the company develops task management software and has a platform designed to foster collaboration in the enterprise. A kinda, sorta competitor to Slack, as well as Microsoft and Trello, Asana is also looking at a direct listing.
Venture capital raised: $213 million
Instacart: The grocery delivery platform has had an interesting couple of years. Meteoric growth and popularity made it a beloved service for many consumers. But it hit a bump when Amazon acquired Whole Foods and Instacart ended a partnership with the latter. The company pushed on, and one year ago its CEO said an IPO was “on the horizon”. Twelve months later, its IPO prospects are being talked up again.
Venture capital raised: $1.870 billion
Unity: The game development platform has been a perennial IPO candidate for the past several years. Early last year, it looked like it was getting its ducks in a row for an offering in 2020. Then, over the summer, it raised $525 million in a private placement to let insiders sell stock and reduce the pressure to go public. There’s probably a 50-50 chance that Unity will finally get out of the gate this year.
Venture capital raised: $1.3 billion
Rubrik: This company provides a data management platform that helps businesses wrangle information stored in public clouds, on-premise systems, or a hybrid of the two. It’s also exploring a direct listing.
Venture capital raised: $553 million