An initial public offering (IPO) occurs when a private company is publicly listed on the stock exchange. It means the public can buy or sell shares (ownership) in a company. An IPO is a liquidity event favored by founders and venture capital firms because it gives them the liquidity of an auction-driven market that they don’t have when a company is private. Their ownership in a company can be easily sold or added to with a few clicks. And the funds from a sale are usually available instantly. That’s much more efficient than a private transaction.
I was curious about IPO historical activity. Here’s what I found for the number of IPOs annually:
- 2018: 255
- 2019: 232
- 2020: 480
- 2021: 1,035
- 2022: 181
The number of IPOs in 2021, in comparison with other years, was huge. That year didn’t just have the highest number of IPOs in the last five years (by a large margin), it saw the highest number of IPOs in in more than twenty-five years (I didn't find reliable data before this). And that includes the internet bubble of the late nineties.
This data was eye-opening—2021 was gargantuan. It was the best year in the last quarter century in terms of companies accessing liquidity via public markets.
Number of annual IPOs is a stat I’ll begin watching more closely.