In the usual end-of-year deluge of trend reports and forecasts, one report stood out as representative of issues important to everyone in the venture ecosystem. CB Insights' 2016 Tech IPO Pipeline Report analyzed 531 companies and the investors that propelled them.
We went Inside the Founder's Studio with Anand Sanwal, co-founder and CEO of CB Insights, to discuss the report and its key findings.
“This is the first year of the report that we noticed this phenomenon that we called ‘drag to IPO’," Sanwal said. "In the past, going public was always viewed as this sign of success. Right now, there are some companies that might get pushed into going public because the private markets close up on them.”
Sanwal also updated the trends on California's leadership in innovation. “California, and specifically Silicon Valley, is a trendsetter. That’s where the majority of these companies are based," Sanwal stated. “Of the 531 companies in the pipeline, 55% were in California. A very distant second was New York. The Valley is a leading indicator for where the rest of technology is often going. International markets look to California and specifically Silicon Valley for emerging business models, technologies, even kind of methods of marketing and the like.”
When asked about the fierce competition among these companies, he identified a familiar theme in the form of the talent wars among technology's high fliers. “There are so many companies that are hungry for talent. You can also look for companies faltering," he said. "So you say, ‘Let’s get our internal HR team calling every one of their sales people, or calling every one of their engineers, and seeing if we can poach them’, and this vicious cycle starts. Once there’s negative momentum, it can start to feed on itself. Talent starts getting plucked away which accelerates the demise of a company.”
Listen to the entire podcast here: