Shares of nCino, which develops a cloud-based operating system for financial institutions, surged 195%+ on first day of trading after raising ~$249M in IPO
Luisa Beltran / Barron's Online :
Context & Ripple Effects
nCino's debut extends a pattern the coverage keeps recording: enterprise software IPOs opening far above their offer price. Coupa closed up 85% in 2016 and Nutanix closed up 131% that same year ($238M raise, ~$5B valuation) — so a 195%+ first-day move on a ~$249M raise is an extreme reading of an established template rather than an anomaly.
First-order effects
- nCino converts the pop into balance-sheet strength and a high-priced acquisition currency almost immediately — within about sixteen months the company deploys that premium toward the $1.2B SimpleNexus acquisition, including $240M in cash.
Second-order effects
- Each outsized debut resets the pricing benchmark for the next software issuer: Couchbase's 2021 Nasdaq jump to a $1.2B valuation and C3.ai's 120% close at a ~$8.9B valuation show bankers and founders anchoring expectations to prior pops when setting offer ranges.
Third-order effects
- If the underpricing pattern holds across cycles, cloud software companies structurally treat the public markets as a currency mint — going public not primarily to raise capital but to bank a valuation premium they can spend on acquisitions, concentrating vertical-software categories through stock-funded consolidation.
The trend: Enterprise software IPOs are repeatedly priced below where the market clears, with first-day pops serving less as windfalls than as the starting point for stock-funded M&A.