How New York City’s technology IPOs performed in 2021 – Crain’s New York Business

Some of the most highly touted New York tech unicorns are getting the cold shoulder from Wall Street, despite a record-setting year for local firms going public.

Take Oscar Health. The SoHo-based technology disruptor to health insurance has seen its share price fall nearly 80% from its $39 initial public offering price in March. The company’s $1.9 billion market cap is well below its last-known private market value of $3.2 billion in 2018, back when Google parent company Alphabet, Joshua Kushner’s Thrive Capital and Peter Thiel’s Founders Fund were betting big on the company’s future.

Oscar’s grouchy debut is on the extreme side but not off-brand for this year’s technology IPOs. Just four of the 16 local startups to have a 2021 IPO were trading above their starting price as of the market close on Dec. 22, according to a Crain’s analysis of data from research firm Renaissance Capital. Nationally, more than half of the year’s 481 IPOs are trading below their offer prices, according to a Bloomberg analysis.

In the red

Joining Oscar Health in the red are:

  • Compass, a Softbank-backed, tech-driven residential real estate company, whose value has dropped by nearly half from its $18 debut price in March.
  • Rent the Runway, the Brooklyn-based fashion company, which lost about 60% of its value in two months on the Nasdaq.
  • UIPath, a Midtown-based provider of automation software for businesses that is down 22% from its $56 offering price in April.

Staying alive

But not all have struggled:

  • The share price for SoHo-based DigitalOcean has climbed 70%, to about $80, from its initial offering in March. The company provides cloud hosting and web services, mostly to other tech startups.
  • Shares of Midtown-based Braze, a marketing-tech company about a month out from its IPO, have climbed 16% in that time.
  • SoHo-based DoubleVerify and West Village–based Integral Ad Science have grown in value. Both companies provide software to analyze the performance of digital advertising.

How they compare

Here’s a look at each IPO performance, with some of the buzziest non–New York public offerings mixed in.

Separately, local unicorns Squarespace and Warby Parker went public through direct listings this year. Squarespace, a website hosting service, is down 38%, to $31, while the e-commerce eyeglasses retailer is up 20%, at $48.

Several companies went public through merger deals with special-purpose acquisition companies. The majority of those firms—including WeWork and smart-lock company Latch—are trading below the standard $10 starting price.

Concerns about inflation and rising interest rates have taken a bite out of some tech stocks in recent months, particularly those companies wracking up big losses. Oscar and Compass both are spending a lot of money to scale up and challenge entrenched industries: health insurance and residential real estate. Rent the Runway is still waiting on a recovery for the clothes people wear to snazzy events and to the office.

Looking forward

The performance of such companies could have broader implications for the private startup investment market, which has been red-hot for nearly two years now. In New York City alone, startups raised $13 billion in venture capital from July through September, smashing previous local records for the third quarter.

Brian Hirsch, co-founder and managing partner of Tribeca Venture Partners, said at a recent industry panel hosted by Fenwick that the poor performance of tech IPOs could be a warning sign that the private investment market will slow.

“The private market lags the public market, always, by six months to two years depending on how you look at it,” Hirsch said. “If that is the case, I suspect it is going to be harder to fundraise in the future than it is now.”

The prominent local tech investor said founders should start thinking about their runway—the term for how long a money-losing startup can keep operating without another cash infusion.

There will be at least two New York tech company IPOs in the early part of next year. Justworks, a payroll and benefits company, and transportation software startup Via both filed for public debuts.