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Tech IPOs on the Rise – No Surprise

Sep 18, 2014

It’s been a banner year for tech IPOs, and the Dow and the NYSE have shown a steady incline in the past 5 years, reaching historic highs this year. This is really no surprise when we look at economics and the evolution of many of this year’s tech IPOs. 

The financial crisis of 2008 might actually be where to place some of the credit. During the economic downturn, companies and individuals needed to spend their money more efficiently, and under greater scrutiny. For many companies who were shrinking operating budgets, technology helped accomplish the same goals but with less money. Shifting the budget to less expensive marketing alternatives like social media and website marketing may have influenced the right time for IPOs like Facebook and Twitter and the impending GoDaddy IPO.

Some companies with possible upcoming IPOs may have even risen out of the recession, having been founded on the premise of saving consumers money when costs are tight. For example, Airbnb, an alternative to costly hotels, was founded in late summer of 2008 and Uber, a cost-effective alternative to taxi cabs, was founded in the spring of 2009.

Five years later, companies that offer consumers perceived cost savings are still in favor, and many companies are still maintaining a conservative mindset when it comes to budget. Since technology and the internet are cornerstones of the companies that are profiting from the 2008 market shake up, there doesn’t seem to be a shortage of tech IPOs. As these companies that 'rose from the ashes' go public, it seems fitting that they might just restore and invigorate investor confidence, and pave the way for many more successful tech IPOs in the years ahead.    

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Marc Fogarty

Marc Fogarty, Audit Partner within Technology and Life Sciences Group, and member of the firm's Public Companies, Cleantech and International Services Groups. Marc is experienced in public accounting, serving public and private organizations and has presented on IFRS to professional groups.

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