Nasdaq survey: startups have little interest in going public

Nearly half of companies said there was "no way" they'd IPO, and only 24% said they definitely would

There has been a growing trend in recent years of companies, like Uber and Airbnb, raising huge amounts of money, at major valuations, without seemingly any plan to go public. Couple that with the terrible market we've been seeing for the past few quarters, and the IPO roadmap for this year looks bleak.

A survey from The NASDAQ Private Market, taken at the South by Southwest (SXSW) Interactive Festival in Austin, Texas, found that the problem may be even worse than originally thought.

In all, out of 126 responses, over 40 percent said that there was "no way" their companies will go public in the future. Another 34 percent said "maybe," and only 24 percent said "definitely." Most startling is that the number of "no way" responses went up by a whopping 62 percent from the year before.

Almost half of the companies surveyed were at least 10 years old, and another 29 percent were only one to three years old. Interestingly, 34 percent had raised no more than $2 million, and 22 percent had raised over 50 million. A quarter of them were software or hardware tech companies, with another quarter being tech companies. The rest were healthcare, consumer goods, entertainment, fitness, education, energy, food/drink and"other."

Rather than going public, thirty five percent said that they would raise venture capital instead, while 31 percent said private equity would be the way they fund their startip, and 25 percent said they would rely on "wealthy individuals."

As for what their top priority is for the year, that was tied between marketing and advertising, and hiring new talent, each of which had 26 percent. Only 10 percent said raising funding, behind both maintaining talent, and research and development.

As bad as those numbers are for the IPO market, they're still better than those found by Silicon Valley Bank in its Startup Outlook 2016 report earlier this month. That survey found that only 17 percent said they are aiming for an IPO, while more than half of the startups said their long-term goal is to be acquired, and 19 percent said they wanted to stay private. 

What both surveys show is an extreme lack of confidence in the IPO market, and probably for good reason.

There were 169 IPOs last year, which raised $30 billion in 2015. Not only was that a 39 percent drop in volume, and a 65 percent drop in money raised, but numbers were the lowest since 2009, which was right in the heart of the recession.

There have been the performances of recent tech IPOs, most of which saw their stock crash in the first months of the year, due to a financial market that, only last week, finally found itself in positive territory for the year.

That has resulted in the fact that the first first quarter of 2016 is almost over and there has not been one technology company that has gone public this year.

For a while it seemed like companies were putting off their IPO because they didn't have to go public, and now it seems like they are doing the same because they don't want to go public. Either way, it's bad news for Wall Street.

(Image source: engagor.com)