With several unicorns and decacorns planning to go public in 2025, VCs and their investors may finally get the distribution bonanza they have been desperate for.
Among the highly anticipated IPOs are offerings from Cerebras, Chime Financial, Hinge Health, Klarna and ServiceTitan. Venture backers with substantial stakes in those companies include Atomico, Benchmark, Bessemer Venture Partners, Coatue, Insight Partners, Iconiq, Sequoia, SoftBank and Tiger Global.
Abhi Tiwari, co-founder and general partner at Blank Ventures, a San Francisco-based VC firm that invests in seed-stage and pre-seed fintech start-ups, is optimistic about the fintech IPO market making a comeback in the next year. He acknowledges the absence of strong tech IPOs for the past 12 months, with the exception of the Reddit IPO earlier this year and a few industrial and energy IPOs.
But with financial platforms such as Chime and Klarna, among others like ServiceTitan, potentially set to go public in 2025, as well as interest rates coming down, Tiwari tells Venture Capital Journal: “We’re bullish on these IPOs being successful and seeing the tremendous potential of innovation trending towards creating value at the intersection of technology and finance.”
Bill Koefoed, chief financial officer of KKR-backed OneStream, which held a successful IPO in July, tells VCJ it’s too hard to predict if 2025 will be a big year for new issues. Based on his experience with OneStream’s roadshow, Koefoed says institutional investors certainly want to hear a growth story, but they are also keen to see profits or a path to profitability.
OneStream, which makes AI-powered enterprise finance software, originally filed to go public in 2021, when its annual recurring revenue was up 76 percent, but it was unprofitable. “Since then, we’ve become free cash flow positive, which I think the market really values,” Koefoed says. “Our GAAP revenue this last year has been tracking much more to our ARR growth.”
OneStream priced its IPO at $20 per share on July 23 and its shares were trading at $30.50 on November 20, giving the company a market cap of $7.3 billion.
Another thing OneStream was able to pitch investors on was a growing total addressable market. “When we did our roadshow slides, I think our TAM was north of $50 billion, and we think we’re in the early innings of the financial transformation cycle,” Koefoed says.
Having an AI story to tell also helped OneStream. “We told our machine learning and AI story when we went public and I think that was important,” Koefoed notes. “I think that story matters a lot. Are you going to be able to take advantage of future trends and capabilities?”
Looking up
The sluggish US IPO market showed signs of improvement this year. New issues have been in short supply since 2021, when they generated a record $142.4 billion. Total IPO proceeds tumbled to just $7.7 billion in 2022, then improved to $19.4 billion in 2023 and about $29 billion this year (as of November 20), according to data from Renaissance Capital.
Potential issuers are also showing signs of optimism, with 199 US IPO filings so far this year, Renaissance reported. That compares to 184 last year, 144 in 2022 and 486 in 2021.
“The outlook for IPOs in 2025 appears generally positive, with several key indicators suggesting a robust environment for equity issuance,” a panel of securities attorneys said at the Practising Law Institute’s 56th Annual Institute on Securities Regulation on November 14.
The panel “anticipates that IPO volumes could grow to $40 billion in 2025, with 80-85 new listings expected, driven by a more favorable macroeconomic backdrop and potential interest rate cuts,” law firm Mayer Brown said in a recap of the discussion. “While these improvements are promising, we have not returned to the average IPO levels of the past 15 years.”
Investors are keeping an eye on several high-profile VC-backed companies for possible IPOs next year:
Cerebras Systems, a maker of chips to accelerate AI, filed an S-1 filing on September 30. It has raised a total of $715 million in venture funding, according to Crunchbase, including a $250 million Series F round in November 2021 that valued the company at more than $4 billion. Major VC shareholders include Foundation Capital (15.3 million shares), Benchmark (14.4 million), Eclipse Ventures (13.8 million), Coatue (7.5 million), Alpha Wave Ventures (9.2 million) and Altimeter Capital (7 million), the S-1 states.
Chime Financial, a mobile banking services provider, reportedly picked Morgan Stanley to lead an IPO next year. Chime has raised a total of $2.6 billion over eight rounds from firms including General Atlantic, Softbank, Tiger Global Management and Sequoia Capital, according to Tracxn. Chime reached its highest valuation ($25 billion) when it raised a $1.1 billion Series F in August 2021, Tracxn reported.
Hinge Health, a virtual physical therapy provider, reportedly hired Morgan Stanley to lead an IPO in 2025. The company has raised $854 million from 15 investors, including Bessemer Venture Partners, Insight Partners, Atomico, Coatue and Tiger Global, Tracxn reported. Most recently, Hinge closed on a $400 million Series E round led by Coatue and Tiger that valued the company at $6.2 billion in October 2021, it said in an announcement.
Klarna, an operator of a “buy now, pay later” service for online purchases, confidentially filed IPO documents with the SEC last week. The company has raised a combined $4.2 billion over 21 rounds from firms including SoftBank Vision Fund, Sequoia Capital and Silver Lake, as well as celebrity Snoop Dogg, Tracxn reported. Klarna’s post-money valuation hit a high of $45.6 billion in June 2021, but it fell to $6.7 billion in July 2022, Tracxn said.
ServiceTitan, a cloud software provider for contractors and trade businesses, filed an S-1 on November 18. It has raised $1.5 billion over 10 rounds, according to Crunchbase, including a $500 million round in March 2021 that the company said gave it a valuation of $8.3 billion. ServiceTitan’s S-1 shows that Iconiq Growth is its largest venture shareholder, with 15.5 million Class A shares (or 24 percent of the total), followed by Bessemer Venture Partners, with 9 million shares (13.9 percent); Battery Ventures, with 4.8 million shares (7.5 percent); and TPG Tech Adjacencies II Sherpa, an SPV, with 4.2 million shares (6.4 percent).
Investors are sure to keep an eye on all of these companies, as an IPO from any of them could provide a much-needed windfall.
Additional reporting by David Bogoslaw
With several unicorns and decacorns planning to go public in 2025, VCs and their investors may finally get the distribution bonanza they have been desperate for.
Among the highly anticipated IPOs are offerings from Cerebras, Chime Financial, Hinge Health, Klarna and ServiceTitan. Venture backers with substantial stakes in those companies include Atomico, Benchmark, Bessemer Venture Partners, Coatue, Insight Partners, Iconiq, Sequoia, SoftBank and Tiger Global.
Abhi Tiwari, co-founder and general partner at Blank Ventures, a San Francisco-based VC firm that invests in seed-stage and pre-seed fintech start-ups, is optimistic about the fintech IPO market making a comeback in the next year. He acknowledges the absence of strong tech IPOs for the past 12 months, with the exception of the Reddit IPO earlier this year and a few industrial and energy IPOs.
But with financial platforms such as Chime and Klarna, among others like ServiceTitan, potentially set to go public in 2025, as well as interest rates coming down, Tiwari tells Venture Capital Journal: “We’re bullish on these IPOs being successful and seeing the tremendous potential of innovation trending towards creating value at the intersection of technology and finance.”
Bill Koefoed, chief financial officer of KKR-backed OneStream, which held a successful IPO in July, tells VCJ it’s too hard to predict if 2025 will be a big year for new issues. Based on his experience with OneStream’s roadshow, Koefoed says institutional investors certainly want to hear a growth story, but they are also keen to see profits or a path to profitability.
OneStream, which makes AI-powered enterprise finance software, originally filed to go public in 2021, when its annual recurring revenue was up 76 percent, but it was unprofitable. “Since then, we’ve become free cash flow positive, which I think the market really values,” Koefoed says. “Our GAAP revenue this last year has been tracking much more to our ARR growth.”
OneStream priced its IPO at $20 per share on July 23 and its shares were trading at $30.50 on November 20, giving the company a market cap of $7.3 billion.
Another thing OneStream was able to pitch investors on was a growing total addressable market. “When we did our roadshow slides, I think our TAM was north of $50 billion, and we think we’re in the early innings of the financial transformation cycle,” Koefoed says.
Having an AI story to tell also helped OneStream. “We told our machine learning and AI story when we went public and I think that was important,” Koefoed notes. “I think that story matters a lot. Are you going to be able to take advantage of future trends and capabilities?”
Looking up
The sluggish US IPO market showed signs of improvement this year. New issues have been in short supply since 2021, when they generated a record $142.4 billion. Total IPO proceeds tumbled to just $7.7 billion in 2022, then improved to $19.4 billion in 2023 and about $29 billion this year (as of November 20), according to data from Renaissance Capital.
Potential issuers are also showing signs of optimism, with 199 US IPO filings so far this year, Renaissance reported. That compares to 184 last year, 144 in 2022 and 486 in 2021.
“The outlook for IPOs in 2025 appears generally positive, with several key indicators suggesting a robust environment for equity issuance,” a panel of securities attorneys said at the Practising Law Institute’s 56th Annual Institute on Securities Regulation on November 14.
The panel “anticipates that IPO volumes could grow to $40 billion in 2025, with 80-85 new listings expected, driven by a more favorable macroeconomic backdrop and potential interest rate cuts,” law firm Mayer Brown said in a recap of the discussion. “While these improvements are promising, we have not returned to the average IPO levels of the past 15 years.”
Investors are keeping an eye on several high-profile VC-backed companies for possible IPOs next year:
Cerebras Systems, a maker of chips to accelerate AI, filed an S-1 filing on September 30. It has raised a total of $715 million in venture funding, according to Crunchbase, including a $250 million Series F round in November 2021 that valued the company at more than $4 billion. Major VC shareholders include Foundation Capital (15.3 million shares), Benchmark (14.4 million), Eclipse Ventures (13.8 million), Coatue (7.5 million), Alpha Wave Ventures (9.2 million) and Altimeter Capital (7 million), the S-1 states.
Chime Financial, a mobile banking services provider, reportedly picked Morgan Stanley to lead an IPO next year. Chime has raised a total of $2.6 billion over eight rounds from firms including General Atlantic, Softbank, Tiger Global Management and Sequoia Capital, according to Tracxn. Chime reached its highest valuation ($25 billion) when it raised a $1.1 billion Series F in August 2021, Tracxn reported.
Hinge Health, a virtual physical therapy provider, reportedly hired Morgan Stanley to lead an IPO in 2025. The company has raised $854 million from 15 investors, including Bessemer Venture Partners, Insight Partners, Atomico, Coatue and Tiger Global, Tracxn reported. Most recently, Hinge closed on a $400 million Series E round led by Coatue and Tiger that valued the company at $6.2 billion in October 2021, it said in an announcement.
Klarna, an operator of a “buy now, pay later” service for online purchases, confidentially filed IPO documents with the SEC last week. The company has raised a combined $4.2 billion over 21 rounds from firms including SoftBank Vision Fund, Sequoia Capital and Silver Lake, as well as celebrity Snoop Dogg, Tracxn reported. Klarna’s post-money valuation hit a high of $45.6 billion in June 2021, but it fell to $6.7 billion in July 2022, Tracxn said.
ServiceTitan, a cloud software provider for contractors and trade businesses, filed an S-1 on November 18. It has raised $1.5 billion over 10 rounds, according to Crunchbase, including a $500 million round in March 2021 that the company said gave it a valuation of $8.3 billion. ServiceTitan’s S-1 shows that Iconiq Growth is its largest venture shareholder, with 15.5 million Class A shares (or 24 percent of the total), followed by Bessemer Venture Partners, with 9 million shares (13.9 percent); Battery Ventures, with 4.8 million shares (7.5 percent); and TPG Tech Adjacencies II Sherpa, an SPV, with 4.2 million shares (6.4 percent).
Investors are sure to keep an eye on all of these companies, as an IPO from any of them could provide a much-needed windfall.
Additional reporting by David Bogoslaw
