The data focused on the average number of years to exit for tech companies around the world provides some interesting comparisons.
One thing that’s become apparent is that tech companies are staying private for longer: in 1997 Amazon went public 2 years after its first round of funding, marketed at $440 million.
In contrast, Uber is now in its sixth year as a privately owned business, but it’s valuation is close to $40 billion after recently raising $1.2 billion.
On a wider scope, the National Venture Capital Association notes that the number of years to IPO exit was 3.1 years in 2000 which more than doubled to 7.4 years in 2013.
The next obvious question is why.
It could be because the amount of time, energy and capital needed to get a company IPO-ready is increasing year on year – which would explain why mergers and acquisitions are generally sorted earlier in a company’s life-cycle.
It may also be down to additional layers of compliance, bureaucracy and liquidity alternatives.
All of these speed-bumps haven’t hampered 2014’s appetite for investments however.
To put these figures into context, in the the first six months of 2014, Silicon Valley saw more tech investment than New York has seen in the last five years combined.
Looking at the average number of years to exit data, African companies take the longest to reach an IPO, which isn’t surprising judging the amount of investor trepidation within the continent, followed by South America and then Asia.
Europe’s companies take the shortest route to IPO, in just under 10 years. However, that’s still 5x longer than the Amazon route taken in 1997.
Mergers and acquisitions are expected to occur earlier in a company’s lifecycle than public exit events, which the data attests to.
There are however, some inter-continental comparisons that can be drawn.
The average number of years to exit for Asian companies, for example, shows that M&As happen further down the line than African private companies and South American private companies are 2 years ahead of their European counterparts.
Europe’s data shows that companies in the region take longer to reach an IPO than merging or being acquired.
This could be a sign of the current lack of will to go public, rather than showing an increasing trend of mergers and acquisitions but there’s no doubt that the average number of years to exit, in any form, is increasing with each passing quarter.