After a slow 2016 in which both startup investment and IPOs fell, VCs are preparing for a busier 2017, as Snap Inc. and more plan to go public
Michael J. de la Merced / New York Times :
Context & Ripple Effects
The backdrop is two years of deferred exits: coverage from mid-2015 examined how delayed IPOs and higher private valuations let startups stay private longer while public investors waited on the sidelines, and by early 2016 Bloomberg reported that private funding was cooling, forcing firms toward the public markets but demanding more proof for their marks.
This piece closes that loop: 2016 ended with both startup investment and IPO volume down, yet VCs enter 2017 expecting a busier year, with Snap Inc.'s planned listing positioned as the test case for whether the exit window has actually reopened.
First-order effects
- Snap Inc.'s IPO would hand its late-stage backers their first major liquidity event since the slowdown, converting paper valuations into priced public shares.
- VCs who spent 2016 unable to return capital through exits get a reopened path to raise and redeploy funds, which is why they are staffing up for a busier deal year.
Second-order effects
- Snap's public-market pricing becomes the benchmark every other highly valued startup measures against — if it trades well, the backlog of unicorns faces investor pressure to file rather than keep raising privately.
- Investment banks gain a pipeline of mandates from companies that postponed listings during the cool-down, shifting fee competition toward whoever wins the first marquee technology deal of the year.
Third-order effects
- If the pattern holds, the industry swings back from the stay-private-longer model documented in 2015 toward a listing wave — a shift the related coverage itself anticipates, with investors and bankers later expecting a wave of IPOs from the most highly valued start-ups.
- Public-market scrutiny returns as a discipline on private valuations: once benchmarks like Snap exist, later-stage rounds get priced against real trading data rather than negotiated marks.
The trend: Tech's capital cycle is swinging back from record-long private stays toward a renewed IPO window, with Snap Inc.'s 2017 listing as the opening trade.