The declines in the U.S. stock market that started early this year have scared off investors in technology startups and led to the longest stretch without a tech initial public offering (IPO) in this century.
Wednesday (Sept. 21) will be the 238th day without a tech IPO of over $50 million, beating the records set after the 2008 financial meltdown and the dot.com bust in the early 2000s, according to researchers at Morgan Stanley.
High inflation has driven the Federal Reserve to raise interest rates, dampening enthusiasm for growth stocks that were big winners during last year’s boom. The tech-heavy Nasdaq is down 28% this year, compared to the 19% drop in the S&P 500, the Financial Times reported Sunday (Sept. 18).
Tech startups have been hit hardest, but it’s not just tech. The Financial Times reported that overall U.S. IPO volumes are down 94% year-over-year, with just $7 billion raised so far compared to $110 billion at this time last year.
Matt Walsh, head of tech equity capital markets at SVB Securities, told the Financial Times, “There’s a tremendous amount of uncertainty in the market right now, and uncertainty is the enemy of the IPO market.”
Walsh expected a “a small group” of companies would venture an IPO this year, but most have already pushed their prospective stock listings into 2023.
Read more: FinTech IPO Index Sheds 2% as Slumping Tech Stocks Offset nCino, 9F Gains
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