According to Caijing News on January 10 (Editor Zhao Hao), some of Silicon Valley's hottest startups are seeking ways to remain private for a longer time, which may disappoint investors waiting for their IPOs and holding their Stocks.

Analysts point out that for well-known companies like OpenAI and SpaceX, the demand for going public has become less urgent, as they can not only secure billions of dollars in new capital from financing rounds but also provide employees with a way to cash out their Options.

In October of last year, OpenAI raised 6.6 billion dollars in financing, reaching a valuation of 157 billion dollars; a month later, SpaceX raised 1.25 billion dollars, bringing its valuation to 350 billion dollars, making it the most valuable private startup in the Global market.

In December, Musk's other company, xAI, raised 6 billion dollars, with a valuation of about 50 billion dollars; that same month, the "data analytics + AI" company Databricks announced it had secured 10 billion dollars in funding, making it one of the largest Venture Capital financings in history.

Databricks' latest valuation has reached 62 billion dollars, far exceeding the 43 billion dollars of 2023. CEO Ali Ghodsi told the media that investors had already provided 19 billion dollars in oversubscription, "Our earliest planned IPO is this year, but now we have flexibility."

Kelly Rodriques, CEO of unlisted company equity trading platform Forge Global, stated, "They can raise such a large amount of funding on such a scale, so there is no motivation to drive them to go public."

According to Forge Global's data, the combined valuation of the seven largest private companies in the USA has now reached 695 billion dollars, with only SpaceX and OpenAI valued at over 500 billion dollars.

Ten years ago, it was rare for venture capitalists to issue a $0.1 billion check to a startup. But Thrive Capital alone has invested over $1 billion in each of Databricks, Stripe, and OpenAI in the past two years.

Mitchell Green, the managing partner of Lead Edge Capital and a former investor in Alibaba and Uber Technologies, stated that in reality, the 15 to 20 largest startups, including Databricks and Stripe, have already gone public as private companies.

Luke Ward, an investment manager at Baillie Gifford who invested in SpaceX, noted that if a public company performs poorly in a certain quarter, it may take a hit, and this short-term pressure could prevent some companies from replicating their performance during the private phase.

Musk has also mentioned that "public companies face tremendous pressure, and the outside world does not allow a company to have a bad quarter. But in reality, this often leads to reduced operational efficiency; you need to give your all at the end of the quarter to avoid disappointing people."

However, some argue that companies need to accept public market pricing when going public, as the valuations of some private startups may be disconnected from their fundamentals. For example, WeWork once reached a valuation of $47 billion but fell sharply after its IPO.

An anonymous investment executive commented, "It feels like some venture capital firms exist in a parallel universe, detached from reality. They have their own valuations and liquidity; it's a game of passing the parcel (hot potato)."

Apart from the top-tier startups, some private companies are still preparing to go public. One reason for this is that they need a way to cash out stock options for early employees before the options expire.

For this reason, companies like Instacart, Klaviyo, and Rubrik have gone public through an IPO in the past 18 months. The good news is that this has not hindered their success, as all three companies' stock prices have seen considerable increases.

Editor/ping