As is often the case, things took a turn at the onset of the pandemic.
When the market collapsed in March 2020, plans to go public were put on hold. The stock market recovered in record time, but then something else held up IPOs: VC money.
Rich with cash, venture investors were happy to keep pouring money into startups. The public markets suddenly didn't seem appealing when a startup could wait six months for its valuation to double from another round of funding.
That formula suited startups well until 2022, when cracks started to show in the market. Cash wasn't cheap anymore — thanks a lot, Fed! — which meant no more eye-popping funding rounds. Meanwhile, IPOs weren't an option since public investors wouldn't support the puffed-up valuations startups were clinging to.
Which brings us to Arm's IPO. A successful public debut, especially such a large one, would open up the floodgates for other companies on the fence about an IPO. Cleaning out the backlog of companies waiting to go public over the past three-plus years would also have some significant knock-on effects.
More IPOs mean VCs get to cash out those early-stage investments. That means more cash for future investments, something the startup community desperately needs, save for those in AI.
Of course, there are no guarantees. Should Arm's IPO fall flat, it could spell disaster. Arm has indicated interest in its IPO from the likes of Google, Apple, and Nvidia.
But if a company in a buzzy sector with big-name backers can't crack the IPO drought, who can?
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