The 2017 Tech IPO Market Ultimatum
The success of Tech IPO markets have always been hindered by private investors who value last minute cash injection than raising capital on a gradual process through the IPO. It can be argued to be an easy way out because of its relative simplified nature of acquiring tech funding through sources such as hedge funds and mutual funds. Private funding aside, 2017 is a promising year for tech startups firms that intend to go public due to several key indicators and factors.
Promising Statistics Despite the Risks
The just concluded general election is not what one would term as the ideal election because contrary to popular opinion, the result was not what many expected. On a similar note, while the political landscape was taking on a completely new path, the economic landscape was not exception. The public markets in 2016 offered relatively better prices and offers as compared to the private sector. The 13 tech firms that went public in 2016 have traded a combined total of approximately 56 percent particularly owing to the domination of the market by strategic players such as Coupa Software and Nutanix.
Promising Tech Firms
Expansion and growth is one of the primary and important objectives of most firms because it is only then that they establish a strong position in the market where they can influence the public to subscribe to their shares. The unpredictable nature of private markets witnessed in 2016 has forced tech companies to seek solace in the public sentimentality. Many of the tech firms now focus on growth, expense minimization and profit maximization, a commitment that has seen most of them attain growth rate of more than 30 percent per annum.
More specifically, there are industries that are poised for more success considering the contemporary trends in the market. Firms that make service softwares stand to gain more from the Initial Public Offer in the coming year and so does companies dealing in cloud computing even though cloud computing is at its initial stages in the US. On a similar note, firms that deal in cybersecurity will also stand to gain in the upcoming tech IPO market because online hacking has become a way of life and is gradually becoming a basic skill that can easily be mastered by those who want to perform fraudulent activities. The hacking of the concluded US general elections by Russia is just a tip of the ice berg and an indicator of the need to tighten security protocols over the net. Firms that will be in a position to maximize on this willhave set a cornerstone of success.
Politics affect the economy by consequently affecting the legislative requirements that touch on businesses, whether established or starting up. The current president elect- Donald Trump during campaign has been very vocal on giving small and emerging companies opportunities to compete on an even platform with more established firms. To do that, he has been open to revision of regulatory requirements that touch on small firms in a way that will limit the number of restrictions imposed on them. Given the fact that he is now the commander-in-chief for the next four years, there is no reason to think otherwise. Trump’s support of small companies (which includes tech firms as well) will be a boost to the 2012 JOBS Act which allows growing companies to file prospectuses in anticipation of an upcoming IPO. This method allows start-up companies to analyze public reception before going public.
The public market is more sentimental towards tech shares than stocks from companies or firms dealing in different fields. It is a means through which money managers can create a distinction during IPO in order to attain sustainable growth patterns. In addition to creating a platform of advancement or growth, tech firms will also be in a position to enjoy the publicity that comes with IPO. It creates goodwill that and the firm or firms involved will earn pubic trust as a credible business entity.
Success of tech firms considering going public is dependent upon the initial pricing strategy or plan. Accurate stock pricing will be the difference between success and failure for tech firms that intend to go public with their shares. Remember that the main objective is to attract or lure public subscribers. If the pricing is correct and accurate, opportunities of growth will be availed but if it is the opposite scenario, public subscribers will shy away from investing in such stock.
From a technological perspective, the upcoming IPO market is set for a major reform if the above factors are anything to go by. Tech markets will benefit immensely if regulations imposed on young start up firms is lifted which fortunately enough has many indicators pointing to that direction. In the upcoming year, tech investments hubs such as Silicon Valley are set to flourish under a beehive of investors and money managers looking for the best chances of investing their money. If the statistics imposed by tech firms over the past 12 months are to be extrapolated to the coming year, the future looks bright for technological gizmo makers.