The IPwoes keep rolling in. Smelling blood in the water, the meal-delivery startup Postmates (valued at $2B) decided to postpone its initial public offering this week… and will potentially avoid the fate of other companies that crashed and burned before it.
But shoulda, woulda, coulda.
Some IPOs — notably WeWork’s — failed to materialize, and many of the 32 tech startups that went public this year underperformed spectacularly, appreciating by an average of just 5%. For comparison, the return rate was 13% in 2018 and 94% in 2017. Oh, how the mighty — by which we mean Uber, Slack, and Peloton — have fallen.
As for Postmates, it filed IPO paperwork in February but then seemed to get cold feet. At a recent conference, Postmates CEO Bastian Lehmann said the company second-guessed its timing due to the markets being “a little choppy when it comes to growth companies specifically.”
Postmates is expected to get rolling on its IPO — again — early next year.
SoftBank, which invested heavily in startups including Uber and WeWork only to lose $5B, is one casualty. SoftBank’s shares have dipped 30% from their peak earlier this year.
Others, meanwhile, have expressed a shift in focus to profits. Bird CEO Travis VanderZanden said recently that the company had pulled in $275m in fresh funding as it revamped its practices to prevent more losses.
Public market investors aren’t interested in sky-high valuations — which are largely arbitrary. They want to see gross margins — a measure of profitability — and more detailed financial models. Hype is fun and all, but fiscal responsibility matters more.