After a hit-or-miss year of initial public offerings in the technology sector, the most likely candidates to go public in 2016 probably aren’t who you’d think, according to a new report.
The not-so-sexy fields of analytics, data centers, security and application integration top a list of 531 companies most likely to enter the public markets next year, according to a new report by data and predictive analytics company CB Insights. Still, the report does highlight some well-known unicorns that could go public.
Topping the list of public market contenders are copy data virtualization company Actifio, integration platform MuleSoft, enterprise virtualization and storage company Nutanix, secure cloud company Okta, and subscription billing company Zuora. But household names like Buzzfeed, Airbnb, Uber and Snapchat also made the cut.
CB Insights ranked the companies based on scores from a technology called Mosaic, which uses “nontraditional public signals” such as customer signings, hiring activity, media sentiment, web traffic and mobile app data. The report also highlights which industries and venture capital firms are likely to shine when it comes to getting funding, and which venture capital firms are most likely to back them.
Internet companies comprise 64 percent of CB Insights’ IPO pipeline companies, followed distantly by mobile, hardware, software and electronics companies. Among Internet companies, business intelligence, advertising, apparel, customer relationship management and security were dominant categories.
But the capital-intensive electronics sector is the most cash-rich field of companies on the list, with a roundtable of top investors in pipeline companies including SV Angel, Sequoia Capital, Andreessen Horowitz, Fidelity Investments and Kleiner Perkins Caufield & Byers.
Despite an unprecedented number of private technology companies reaching valuations over $1 billion, the 2016 forecast comes after a year of less-than-stellar starts for technology company IPOs.
Financial technology company Square, for instance, priced its IPO at 30 percent less than in a private fundraising round a year ago, and flash storage company PureStorage debuted for trading below its IPO price. In the third quarter of 2015, average IPO returns were negative for the first time since 2011, according to a report by Renaissance Capital.
“Twenty-fifteen was a surprise to the downside,” Byron Deeter of Bessemer Venture Partners told CNBC Wednesday. “Fewest IPOs since 2008 — in the cloud industry in particular … but we see more ahead for 2016. The pipeline is fantastic in terms of late-stage companies that are pre-IPO. There’s a lot of discussion around companies like Dropbox, Stripe, DocuSign, Twilio, et cetera. We expect companies like that will make their debut in the coming quarters.”
To be sure, there have been some bright spots to round out 2015. Square has since seen its stock price rise, and Australian business software maker Atlassian saw shares soar on its trading debut.