Investment group Iconiq is reportedly seeking ways to drive value amid a long IPO drought.
That’s according to a report Sunday (Sept. 8) by the Financial Times (FT), which notes that Iconiq recently closed its largest fund at $5.75 billion, following a $4.1 billion fundraise in 2021.
Iconiq partner Matthew Jacobson told the FT the fund would adapt to the downturn that has caused a drop in initial public offerings (IPOs) in recent years.
“The vast majority of our value has historically come from the public markets; we’ve had around 30 IPOs in the last 11 years,” said Jacobson. “That’s changing. We haven’t had a new company go public since 2021.”
Instead, the group — which has ties to Meta CEO Mark Zuckerberg and Twitter founder Jack Dorsey — will capitalize on “new sources of activity,” Jacobson added, such as a number of mergers and acquisitions driven by strategic investors, and the rising trade in startup stock on the secondary market.
According to the FT, this adjustment is happening amid a major drop in venture capital (VC) fundraising, which dropped from $191 billion in 2022 to $82 billion last year, with this year expected to fall even further.
Meanwhile, the FT says, the artificial intelligence (AI) boom has helped attract investors like Iconiq. The company has shied away from startups like OpenAI that are building underlying AI models because of how “immensely capital-intensive” their work is, Jacobson said.
Iconiq has instead made smaller investments in startups developing applications built on top of AI models.
Last month saw reports that many bankers and executives were hoping for a revitalization of the IPO market next year, after the rebound envisioned for 2024 never materialized.
“It’s not just recent turbulence in the stock market holding IPOs back, but also worries that the economy could grow hectic again, with the outcome of November’s presidential election and the Federal Reserve’s interest rate decision still undetermined,” PYMNTS wrote.
Some companies are postponing their IPOs, such as the Chinese autonomous-driving technology firm WeRide, which needed time to finalize documents before it could go public. In addition, ticket reseller StubHub said in July it was postponing its pre-IPO investor roadshow.
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