Navigating Uncertain Times: IPO Insights for Late-Stage Technology and Life Sciences Companies

By: Ran Ben-Tzur , Amanda L. Rose , Robert A. Freedman , Ron C. Llewellyn

Although many of the economic, geopolitical and pandemic-related obstacles from 2022 remain, some leaders are beginning to see a light at the end of the tunnel for the IPO market, according to Fenwick’s January 2023 survey of 200 U.S.-based investors and executives in the life sciences and technology sectors. 

Our survey found that while tech and life sciences executives still have IPO ambitions, many continue to be cautious in light of current market conditions, with nearly half of respondents expressing that they are unsure when their companies will be able to go public. As executives explore alternate funding options, investor sentiments are mixed for 2023. While no one can say for certain when the IPO market will rebound, what’s clear is that 2023 can be a valuable opportunity for executives and investors to continue to plan and prepare for when the window reopens.

Fenwick’s latest report focuses on findings from the aforementioned survey, market perspectives, guidance for IPO readiness, and alternative strategies and considerations for late-stage companies.

Key Findings:

  • 2024 is most likely for IPO market recovery, but some investors aren’t counting out 2023.
    • Sixty-four percent of tech and life sciences investors project the IPO market will rebound in 2024. Still, more than a quarter of investors in both tech and life sciences hold out hope for a turnaround in 2023.
    • Executives are more reserved in their outlook. Just 8% of tech executives project their company will conduct an IPO in the next six months, and none of the surveyed life sciences executives expect an exit in the same time frame.
    • Roughly half of tech (46%) and life sciences (52%) investors express optimism for investment opportunities in 2023.

  • Executives consider private financing, M&A transactions and cost-cutting measures as alternative or supplemental strategies to an IPO.
    • Tech executives rank private financing (75%), cost-cutting exercises (42%) and an M&A transaction (32%) as their most likely alternatives or supplements to raising capital through an IPO.
    • Life sciences executives rank cost-cutting exercises (54%) and private financing (42%) as their top alternatives or supplements.

  • ESG is increasingly important to both investors and executives.
    • Seventy-eight percent of tech investors and 76% of life sciences investors say ESG is at least moderately important in IPO valuations and investment decisions.
    • Sixty percent of tech executives have implemented ESG initiatives or have a plan in place for implementation. Just 44% of life sciences executives have done the same, with another 28% considering such a program.

To learn more, download the full report.