Tech ‘unicorn’ IPOs are booming

Highly-valued tech startups are going public at a pace not seen in three years.

Four so-called “unicorns,” or private companies valued at $1 billion or higher, completed initial public offerings in the second quarter. That was double what was seen in the first quarter, and equal to the number of unicorn IPOs for the entire year in both 2015 and 2016, according to data compiled by Goldman Sachs.

The four unicorn IPOs in the 2nd quarter were double what was seen in the 1st quarter, and equal to the full-year total for both 2015 and 2016.Goldman Sachs

These IPOs have seen mixed success. Here’s a breakdown of the four former unicorns that made it to market in the second quarter, with all valuation data from Goldman:

• Okta — Completed IPO in April, valued at $1.8 billion, above its last funding round, which put it at $1.2 billion
  • Stock has surged 42% since pricing
• Cloudera — Completed IPO in April, valued at $1.9 billion, well below its last funding round, which implied a $4.1 billion valuation
  • Stock has climbed 19% since pricing
• Delivery Hero — Completed IPO in June, valued at €4.4 billion, above its last rounding round, which put it at €3.1 billion
  • Stock has risen 6.6% since pricing
• Blue Apron — Completed IPO in June, valued at $1.9 billion, slightly below its last funding round, which implied a $2 billion valuation
  • Stock has plummeted 46% since pricing

It’s worth noting that while Blue Apron’s final valuation doesn’t look particularly weak relative to its last private funding round, the company had a hellacious time going public.

In the weeks leading up to Blue Apron’s final pricing, retail juggernaut Amazon shelled out $13.7 billion to buy Whole Foods, which caused potential investors to consider the possibility of more competition in the food-delivery industry. As a result, Blue Apron took a cleaver to its IPO range, cutting it to $10 to $11 a share, down from $15 to $17. The company ultimately priced at $10 a share — 40% below the maximum it had sought.

The ordeal serves as a cautionary tale for other unicorns which may be considering a public offering. It shows that industries of all types can prove fickle to external pressures, and stresses just how important it is for companies to exercise caution when trying to time their IPOs.

So what’s next for the growing unicorn universe? After all, 13 new ones emerged during the second quarter, more than offsetting the four that went public. There are now 168 unicorns out there.

The biggest single funding round for a software and internet company in the second quarter was a $400 million Series E for Houzz, a popular photo site used by homeowners to plan renovations. Other companies receiving considerable late-stage funding included Peloton ($325 million) and AvidXchange ($300 million), according to Goldman.

The number of unicorns has either increased or stayed flat in ever quarter since the start of 2014, the firm’s data show. Here’s a look at their trend over time:

The number of unicorns has increased or remained flat in each quarter since the start of 2014.Goldman Sachs