Waiting for the Big Fish? The Next Web IPOs Might Surprise You
No, not Facebook. — Not Zynga. — And probably not Groupon. — At least not yet, when it comes to the blockbuster Web IPOs that Wall Street and investors have been waiting for, and now expecting to roll out sooner …
Context & Ripple Effects
This BoomTown piece lands two weeks after DealBook reported a Zynga public offering was unlikely this year, and extends the same argument to the other names Wall Street has been pricing in: not Facebook, and probably not Groupon either — at least not yet.
Timing matters because Facebook spent late January doing everything except preparing for a listing: confirmed Q4 lobbying spend of $130,000, triple the year before; a $360 million federal judgment against a spammer; and, on the day this ran, the launch of a deals overview page that puts the company squarely against Groupon's core local-deals business.
First-order effects
- Bankers and late-stage investors counting on a Facebook, Zynga or Groupon float to reset private-market marks have to keep waiting, with DealBook having already reported on January 10 that a Zynga offering is unlikely in 2011.
- Groupon's path to a listing gets more complicated now that Facebook's confirmed local-deals push puts a far larger rival directly into its merchant market ahead of any filing.
Second-order effects
- With no marquee consumer-web debut on the calendar, attention and capital pool around whichever smaller name files first, turning the 'which IPO surprises us' question itself into a valuation driver for second-tier web companies.
- Facebook's expansion into regional local deals raises the bar for what Groupon needs to demonstrate about durable market position before it can sell its story to public investors.
Third-order effects
- If the cycle's biggest consumer-internet names keep deferring listings, growth capital stays concentrated in the late-stage private market rather than cycling through public offerings — the frontier-capital-concentration pattern — leaving retail investors without access to the sector's headline companies.
The trend: The defining social-web companies of this cycle are funding growth privately and deferring IPOs, pushing the public-market reckoning further out and concentrating ownership among private backers.