Despite lingering fears from market volatility and the uneven performance of major IPOs in 2012, the entrepreneurial community is bullish on the IPO market and pipeline for 2013, and expects continued improvement in the U.S. economy, according to the results of a recent poll conducted by KPMG LLP, the U.S. audit, tax and advisory services firm.
In polling more than 700 venture capitalists, professionals and entrepreneurs globally, KPMG found that roughly 60 percent of respondents expect the economy to improve in 2013. Twenty-six percent expect the economy to stay the same, and 15 percent expect an economic downturn. The entrepreneurial community is even more optimistic for an uptick in IPO activity, with 66 percent expecting an increase, followed by 23 percent expecting activity to stay the same and 11 percent expecting a decline.
“A healthy IPO pipeline and continued demand for investment in high-growth, innovative companies will be key drivers for a successful IPO market in 2013,” said Brian Hughes, KPMG partner based in Philadelphia and co-leader of its venture capital practice. “If the broader equity markets can continue to keep pace with the performance experienced during January 2013, then the year overall should be great for IPOs.”
When asked which industries would experience the largest increase in IPO activity, respondents most frequently cited technology (39 percent), healthcare and life sciences (25 percent) and energy (19 percent). Respondents overwhelmingly believe that early and expansion-stage companies are the most promising for investment. Forty percent of respondents say the expansion stage is the most promising followed by early stage at 35 percent. In fact, the majority (57 percent) of respondents believe there will be an increase in early-stage investment specifically.
“Investors want to see proof of concept and strong customer demand before committing capital,” said Packy Kelly, KPMG partner based in Silicon Valley and co-leader of its venture capital practice. “Increased investment appetite in the early and expansion-stages is a trend we’ll continue to see as entrepreneurs build new companies leveraging the advances in cloud computing, social media and mobile devices.”
Despite having a positive outlook for the IPO market, professionals indicated that significant obstacles remain. Respondents say increased volatility in the public market (28 percent) and fallout from the poor performance of major IPOs in 2012 (27 percent) are the primary challenges, followed by limited funding (17 percent), the belief that M&A is a better alternative (17 percent) and compliance requirements (11 percent).
The KPMG Venture Capital Practice held its Semi-Annual IPO Webcast to discuss the current state of the IPO market in early February. During the webcast, a poll was conducted to gauge market sentiment. The results reflect responses from more than 700 venture capitalists, professionals and entrepreneurs globally who self-selected to participate in the poll. A replay of the webcast can be found at this link, and an infographic of the poll results can be found at this link (PDF).
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.
Contact: Tracy Iacovelli
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