Tech VC: Tramp Down Your IPO Expectations

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A top tech venture capitalist warned that startups about to launch initial public offerings this year should be ready to get less than they expect when they launch.

Tech investor Fred Wilson says that heavily anticipated IPOs for this year, including Airbnb, Lyft and Uber, could fetch less than expected despite steady growth and fundraising in the years leading up to their long awaited IPO filings this year. He blames weak equity markets as one of the reasons for this year’s IPO disappointments.

In addition, “I do think a difficult macro business and political environment in the US will lead investors to take a more cautious stance in 2019, “Wilson said in his blog. “It would not surprise me to see total venture capital investments in 2019 decline from 2018. And I think we will see financings take longer, diligence on new investments actually occur, and valuations to come under pressure for even the most attractive opportunities.”

Many tech IPO’s this year received very large valuations, boosting high expectations for their going public. Wilson says the economic issues and increasing head winds could cause those valuations to decline, tempering how much money those IPO’s eventually make.

Wilson is a venture investor who placed early bets on tech successes Twitter, Coinbase and Zynga, and is a co-founder in Union Square Ventures.