For the past few years, the dominant mantra across Silicon Valley was to keep companies private for as long as possible.
But, even in the midst of a pandemic, a red-hot stock market is changing that calculus, encouraging a host of these high-valued, so-called unicorn startups to take the public plunge. Three of the ten biggest tech IPOs for US companies, measured by capital raised, have taken place this year: Snowflake, DoorDash, and Airbnb.
And the market shows no sign of cooling in the new year, when more than a dozen startups plan to go public.
Some of those companies, like loan financing startup Affirm and online gaming platform Roblox, were supposed to IPO this month, but pushed back their listing dates, reportedly to woo investors into agreeing to pay higher prices. This after Airbnb and DoorDash's public offerings saw huge price gains on the first day of trading.
Others are multibillion dollar unicorns that have been steadily marching toward an IPO for years and believe the time will likely be right in early 2021, including cryptocurrency exchange Coinbase, retail investing platform Robinhood, and grocery delivery app Instacart.
That means that many of Silicon Valley's biggest venture firms are already poised for a year of strong returns.
While each of these unicorns have many investors, only a select few venture firms have stakes in multiple unicorns gearing to go public.
It serves as a strong signal to the industry when such investors can generate sustained and consistent returns over time, either by identifying promising startups early, or by muscling their way into a hot, late-stage startup's cap table.
One such firm is Andreessen Horowitz (a16z). At least six of its portfolio companies are expected to float an IPO in 2021: Affirm, Coinbase, Databricks, Instacart, Robinhood, and Roblox.
As an example of the kinds of returns a16z may see, take, for instance, its Series A investment in Databricks led by its cofounder Ben Horowitz in 2013. A16z purchased almost 4.5 million shares at an estimated $3.11 a share, according to deal database Pitchbook. It bought more shares in later rounds, too.
While we don't know what Databricks' share price will be for its IPO, we do know Pitchbook's estimated share price at its last $6.2 billion valuation was $42.95. That's already up more than 13 times the Series A price. And the hope with every IPO is that the companies will be valued even more than their last private-market valuations.
Andreessen Horowitz also led Instacart's Series B round in 2014, a $44 million round where the company's share price was $14.90, says Pitchbook. That dollar amount more than quadrupled to $60 this year when Instacart raised its Series H round and was valued at $17.7 billion post-money.
Sequoia Capital had eight companies go public this year, including data warehousing giant Snowflake and video game company Unity.
Next year, at least three more of its portfolio companies are set to go public: Instacart, Robinhood, and software startup UiPath.
The venture firm, which hauled in returns ranging from 8X to 11X from three of its earlier funds, was an even earlier investor in Instacart than Andreessen Horowitz, leading the grocery delivery business' Series A round in 2013, when its share price was just $1.19, according to Pitchbook.
That means Sequoia is set to see a particularly handsome profit when the company goes public at an anticipated $30 billion valuation.
Index, Founders Fund, Kleiner and GGV
Index Ventures is sitting pretty from leading Robinhood's $3 million seed round in 2013. The fintech startup, which received a huge boost in new retail investors over the summer, is now aiming for a $20 billion valuation when it goes public next year.
Index also backed Roblox, which was valued at $4 billion as of February, and, despite the delay, some expect it to be a much loved stock by public investors with a value that could double to $8 billion.
Other marquee investment firms like Founders Fund and Kleiner Perkins will also see public exits from its portfolio companies.
Founders Fund has stakes in Affirm and real estate startup Compass, while Kleiner Perkins has put money in online mortgage lender Better.com, Instacart, Robinhood, and UiPath. Better.com intends to file confidentially for an IPO as soon as January, and Compass is aiming to go public in 2021 as well.
GGV Capital is also set to have a strong 2021, as its portfolio companies Affirm, Coinbase, and used clothing reseller Poshmark all go public.
What's more impressive is that two of those three investments were led by the same person, GGV's managing partner Hans Tung. Those exits would add to Tung's already-impressive 2020, where two of his portfolio companies, Airbnb and Wish, went public.
Coatue, Tiger, T. Rowe
The venture industry isn't the only beneficiary of the crop of startups going public. Hedge funds that have become growth-stage venture investors will score big, too.
In 2020 alone, Coatue Management wrote checks in more than a dozen unicorn startups, following a broader trend of hedge funds doing more private investing alongside traditional assets like stocks and bonds.
And that strategy should pay off for the firm in 2021 as its portfolio companies Instacart, Databricks, and UiPath go public.
The same goes for Tiger Management, the legendary hedge fund run by billionaire Julian Robertson, whose personal network has spawned dozens of other hedge funds as well.
Tiger firm invested in no less than six companies set to IPO next year: Coinbase, Databricks, DoubleVerify, Instacart, Roblox, and UiPath.
T. Rowe Price, another investment management firm, is queued up to have a big 2021, too, with stakes in Databricks, Instacart, and UiPath.