附近上门

If it takes a lot of effort to put money into companies, it takes even more work (plus a fair bit of luck) to get it back out. By definition, there is no public stock market for private company equity, so liquidating one鈥檚 stake in a startup isn鈥檛 as easy as firing up a stock trading app on your phone and placing a sell order.

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Like with our Q4 2018 global investment report, which covered the money going into startups, this piece鈥攆ocusing on money coming out of the same companies鈥攆eatures a couple of takeaway points to make this report just a little more digestible.

• Bullish Key Finding. The IPO market was fairly robust throughout much of 2018. Additionally, dollar volume generated from M&A of venture-backed companies topped 2017鈥檚 totals, indicating that the average transaction size is going up.
• Bearish Key Finding. Acquisitions of venture-backed companies continued sliding downhill, producing the first year-to-year decline in a long time. Also, public market volatility doesn鈥檛 bode well for a handful of companies hoping to jump through the IPO window in 2019.

Money Out

There are three primary ways shareholders (investors, founders, and employees) are able to get money out of a private company: by selling that company to another, by taking the company public in an initial public offering (IPO), or through a sale of stock through the secondary market.

Venture-Backed Acquisitions

One of the most common routes to a financial 鈥渆xit鈥� is through mergers and acquisitions. If a company is bought for cash or stock in a public company, shareholders might get some of those proceeds, depending on the terms of the deal and the seniority of any given shareholder.

In the chart below, we show reported venture-backed startup M&A activity over time. This is based on reported data aggregated by 附近上门.

Before continuing, keep in mind that there are sometimes reporting delays for acquisitions, and acquisitions that took place in the past are added to 附近上门 regularly. In other words, these numbers may be subject to change over time. At the same time, they shouldn鈥檛 shift much. Bigger deals tend to be reported and added to 附近上门 in close to real time.

Reported exit deal volume led a slow but steady march downward throughout the final quarter of 2018, as the chart above shows. The impact of this trend is finally being felt on a larger timescale. Of all the M&A events captured by 附近上门 in 2018, 1,376 were for companies with known VC backing. That鈥檚 down from 1,429 deals reported in 2017.

Reported dollar volume grew since Q3. Some of the nearly $20 billion gain is no doubt attributable to buyouts of companies like , which . Qualtrics had over the course of prior to its acquisition.

Annual dollar volume is up relative to last year, with just under $158 billion getting cleared in 2018, compared to $146.3 billion in reported M&A dollar volume in 2017.

And here are some of the biggest highlights from the year.

Let鈥檚 take a look at the other primary way shareholders can cash in their equity.

Initial Public Offerings

Getting your private company listed on a public exchange, typically via an initial public offering, is the second main path to liquidity. There are some that have gone public through alternate means, most notably , which completed a direct listing in April, a move that 附近上门 News documented prodigiously.

The IPO market in 2018, on the whole, was fairly robust. But it was slightly less active in the final quarter of the year. A few U.S. tech companies floated shares, but only at the beginning of the quarter. Between October 2 and October 5, freelance marketplace , search and analytics company , and enterprise SaaS platform , all went public. Following that crazy week, a few China-based companies debuted on U.S. markets, but offerings from the likes of and underperformed expectations. Q4鈥檚 may have tempered or delayed other companies鈥� bids to go public.

Here鈥檚 a selection of some of the biggest IPOs by venture-backed companies throughout 2018.

And here鈥檚 an even more comprehensive list of companies that have gone public in 2018.

Secondary Market Transactions

The third main route to liquidity is by selling shares on the secondary market. We鈥檙e not going to go into too much depth here, because often go unreported, and there isn鈥檛 enough data available to suss out many trends in this facet of the market.

There is considerable friction involved in these transactions. Assuming the company stockholder is able to navigate the applicable securities laws and shareholder covenants that may be unique to that company, there鈥檚 still the fact that secondary markets aren鈥檛 very liquid, and there are regulatory hurdles prospective buyers must clear to acquire those shares.

This being said, as companies raise more capital from private markets, they can take more time to go public. Accordingly, in 2018 many companies initiated secondary sales and to give some shareholders the ability to cash out. As one example, in May, Uber shareholders with more than 1,000 shares were given the opportunity to sell up to $10 million worth of stock as part of a involving investment firms , , and , according to reporting from and .

Looking Ahead To 2019

All eyes will be on ride-hailing giants and , both of which filed initial IPO paperwork with the SEC in mid-December.1 With between the two competitors, any public offering, even a lackluster one, could bring a major cash windfall to each company鈥檚 investors.

Following the success of Spotify鈥檚 direct listing, more companies may pursue that route in 2019. In December, that ( in total backing) and ($1.2 billion in total backing) may list their shares directly on public exchanges, largely cutting out the investment banks that traditionally underwrite initial public offerings.

There are plenty of other companies that might go public in 2019. As of October 2018, was in talks with JP Morgan Chase and other investment banks to underwrite an IPO. Also as of October, was in talks to go public in 2019. , , , and others are also potentially in the running.

But if stock market volatility continues, it鈥檚 possible that some, but not all, of these 2019 IPOs may be put on ice until conditions improve. Here鈥檚 to hoping that doesn鈥檛 give investors cold feet.

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