00:00 Speaker A
Several companies including Klarna, StubHub and Chime reportedly delaying or considering delaying their initial public offerings amid market sell-off triggered by President Donald Trump’s announcement of broad reciprocal tariffs. The market sell-off put the brakes on what was expected to be a revival of IPOs here. The Renaissance capital saying its IPO ETF had its worst week since March of 2020. For more, I want to bring in Angela Lee, 37 Angels founder and Columbia Business School Professor. Angela, great to speak with you here. What would it take to get the IPO market back on track?
00:41 Angela Lee
Well, investors and founders want to see stability. And we are in an incredibly unstable place. Um, I’m sure a lot of you follow VIX, which is a volatility index. We are at the third highest point since, in the last 20 years, right? So the only time we’ve seen more volatility was March of 2020 during COVID, and then October of 2020, um sorry, October 2008 during the great financial crisis. And nobody wants to IPO into that sort of market. And unfortunately, we have a pretty bad precedent with CoreWeave. So CoreWeave IPOed just a week and a half ago, and their share price dropped 22% just last Thursday and Friday. That is a really scary market to go into.
01:51 Speaker A
So what was the pipeline like coming into this in terms of size? There’s lots of big names, but was it, was it a very big pipeline that’s now obviously gone to zero?
02:07 Angela Lee
Yeah, we have a really big backlog in the IPO market right now. It’s been very depressed for three years. And everyone was saying 2025 is going to be the year where things are going to come through. Unfortunately, it doesn’t look like that’s going to be the case.
02:25 Speaker A
I I wonder, Angela, too, how you’re thinking about the impact on small businesses that were potentially planning to sell this year. I got a lot of questions about that over the weekend.
02:38 Angela Lee
Yeah, we’re in this really scary cycle because VC companies and PE companies, they will go out and raise money from their investors, and they need to return that money to their investors in 10 years. When that doesn’t happen, they can’t raise new funds, which means that new companies are not going to be invested in, and that really hurts innovation and growth.
03:00 Speaker A
And how does that, how do you think about how that impacts kind of the self-fulfilling prophecy then of the IPO market? Like if you’re not seeing that growth, then later on you maybe are not going to see as many IPOs.
03:16 Angela Lee
Absolutely. And it’s just it’s this thing that also takes a really long time to work its way through the market because if a company, if the next Airbnb, the next Uber doesn’t start right now, then we’re not going to see that company IPO in 10 years. So this is a very, very long-term effect.
03:35 Speaker A
Angela, great overview. Thank you so much. Really appreciate it.
03:40 Angela Lee
Thank you.