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
This story closes a loop that opened in mid-2015, when coverage of delayed IPOs and inflated private valuations explained why startups were staying private longer — and what that meant for public investors locked out of late-stage growth. A year later, Bloomberg's warning that cooling private funding would force firms to go public and 'show more' for their valuations set up 2016 as the year the reckoning would arrive.
Instead, both startup investment and IPO activity fell in 2016, leaving venture firms sitting on mature portfolio companies and unreturned capital. The New York Times now reports VCs preparing for a busier 2017, with Snap Inc.'s planned listing as the marquee test of whether public markets will pay private-era prices.
First-order effects
- Snap Inc. moves from private-market pricing to public scrutiny in 2017, becoming the benchmark listing other late-stage startups and their investors will price against.
- Venture firms holding stakes in long-private companies finally get a credible exit window after a 2016 in which both funding and listings declined.
Second-order effects
- A successful Snap offering would pressure other highly valued startups to file rather than keep raising at flat or down rounds, reviving the IPO pipeline bankers spent 2016 waiting on.
- Public-market investors regain access to late-stage tech growth they were shut out of during the stay-private years, shifting valuation discovery back toward listed exchanges.
Third-order effects
- If the 2017 reopening holds, the industry's multi-year pattern — private rounds substituting for IPOs, then private funding cooling and forcing listings — completes a full capital cycle, resetting when startups go public as a routine stage rather than a last resort.
- The related coverage's expectation of a sustained IPO wave over the following 18-24 months suggests the market may be entering a period where public offerings again compete with private rounds for late-stage capital.
The trend: Tech's exit cycle is swinging back: after years of delayed IPOs and rich private valuations, cooling private funding is pushing marquee startups like Snap Inc. toward public listings.