A wave of listings and public sales in the US has resulted in a windfall for investors and technology employees, providing a record $ 582.5 billion in profit for the year through September.
Startups that completed initial public offerings, direct listings or deals with special-purpose acquisition companies accounted for $ 513.6 billion of the total, with 93 listings between July and September, the highest of any quarter this year.
Data from PitchBook, which investigates startups, showed that total revenue from sales and public listings was already double last year’s figure.
The surge in prices promises to generate huge profits for venture capital firms and their investors, extending a hot streak of public market debuts dating back to the IPOs of Airbnb, DoorDash and Snowflake last year.
Investors have pointed to the size of the recent so-called exits to justify a sharp jump in trading this year, which already surpassed last year’s record total by more than 40 percent, according to data from PitchBook.
The favorable market had encouraged some investors to raise valuations of private start-ups to the point that public listings had become the only viable exit opportunities, said Andrew Adams, managing partner at venture firm Oak HC / FT.
“It puts a lot of pressure on building a great company,” Adams said.
While sales to private equity companies and sponsors account for the majority of startup exits, large public listings account for a growing share of venture capital investment income. Venture capital firms rely on outflows to return cash to investors, such as donations and pensions.
Commission-free brokerage Robinhood produced the largest outflow for investors in the third quarter after completing an initial public offering that gave it a market capitalization of $ 32 billion. Robinhood had raised about $ 5.6 billion from private investors before listing, including $ 3.5 billion in convertible debt funds earlier this year.
Cryptocurrency exchange Coinbase completed the largest direct listing so far this year, reaching a market capitalization of $ 76 billion on its first day of trading in April. Coinbase raised less than $ 600 million before its public debut, making it one of the most lucrative first venture investments in history.
Venture capitalists and other insiders generally have to wait six months after a public listing to begin dumping the shares, although direct listings have no selling restrictions. Robinhood also relaxed some of the usual railings, allowing employees to immediately sell 15 percent of their shares.
A wide swath of ventures-backed companies have turned to public markets, which have recently become receptive to fast-growing companies with little or no earnings. Tech companies have completed more traditional IPOs in the United States this year than in any other year since 2000, according to Refinitiv data.
The flood of listings has also included several immature startups with minimal sales going public through Spacs, an alternative to the traditional IPO that briefly gained favor with retailers.
“People rush to the exit so the door doesn’t slam shut,” said Cameron Stanfill, risk analyst at PitchBook.