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AI Startups Exploring IPOs Include Stripe And Anthropic

Last Updated April 10, 2024 2:25 PM
Giuseppe Ciccomascolo
Last Updated April 10, 2024 2:25 PM

Key Takeaways

  • The success of recent tech IPOs like Reddit and Astera is creating a positive climate for AI startups to go public.
  • AI companies are considering the public markets to access broader financial resources.
  • Public markets offer AI startups benefits like increased brand recognition and potentially more favorable valuations.

Several artificial intelligence (AI) startups are considering going public, according  to NYSE executive Michael Harris, as the tech listings market gains momentum. Although Harris didn’t mention any company aiming to be listed, the market wonders about AI big names working on an initial public offer.

Moreover, the recent IPOs of Reddit and Astera, coupled with speculation surrounding a potential Telegram IPO, have injected fresh energy into listing activities in New York. This trend underscores the shift of AI companies from relying solely on private funding to considering the public markets.

AI Startups Exploring IPOs

Harris didn’t mention specific companies aiming to go public. But, according  to insider sources, major AI startups like Cerebras and Stripe have a high probability, at 97%, of making their debut soon. Cerebras specializes in designing semiconductors for AI and has forged partnerships with prestigious institutions like the Mayo Clinic and Jasper. With a valuation of $4.3 billion and $723 million raised privately, it stands as a prominent contender.

Stripe, a payment giant, holds a market value of $50 billion and has raised $9.1 billion in capital. Its collaboration with OpenAI to implement GPT-4 across its platform further underscores its IPO potential. Synthego, another AI company with a 97% chance of debuting on the NYSE, focuses on genomic engineering for drug discovery and medical research. It boasts a valuation of $1.2 billion and $461.5 million raised.

Ultima Genomics, utilizing AI analysis for genomic sequencing, stands at a 96% likelihood of going public. It’s valued at $3.6 billion with $600 million raised. Checkr, offering an AI-driven HR hiring platform, holds a 95% possibility. It has a valuation of $4.6 billion and $750.8 million raised. OneTrust, specializing in data governance programs, stands at 95% likelihood, valued at $4.5 billion after raising $1.2 billion.

SingleStore, providing AI data analytics, has a valuation of $1.3 billion with $582.2 million raised, while ThoughtSpot, an AI data analytics startup, boasts a valuation of $4.4 billion and $801.5 million raised. Anthropic, a generative AI startup valued at $25 billion with $7.3 billion raised, has a 94% chance of going public. In contrast, Uniphore, valued at $2.5 billion with $624.2 million raised, holds a 94% likelihood of entering the market.

Success Cases So Far

There has been a surge in demand for public offerings, particularly for AI-related ventures. On Wall Street, Reddit witnessed a remarkable debut , fueled by investor interest in its potential to monetize data licensing for AI systems. Similarly, Astera Labs, a semiconductor connectivity company, experienced a strong start to trading.

Despite boasting a dedicated user base of 73.1 million daily Redditors across its vast array of forums, Reddit has yet to achieve profitability. Nonetheless, its losses are narrowing, and its revenue streams are expanding. Reddit’s stock soared in its Wall Street debut, with its market value nearing $9 billion within seconds of trading on the New York Stock Exchange. Priced at $34 a share, Reddit’s IPO debuted at $47 a share. It then closed trading at $50.44, marking a 48% increase from its initial price.

Astera Labs Inc. witnessed a remarkable 72% surge in its stock price during its trading debut, following a highly successful IPO that surpassed expectations. The company secured an impressive $713 million during its pre-listing offer, making it the fourth-largest IPO of the year.

Established in 2017, Astera specializes in semiconductor-based connectivity solutions. It has a strategic focus on integrating AI and machine learning into cloud computing. In 2022, a funding round led by Fidelity Management & Research raised $150 million, elevating Astera’s valuation to $3.15 billion.

Why Is Going Public Attractive?

Since ChatGPT‘s release in late 2022, a plethora of AI startups have emerged, dedicated to crafting generative AI services for both consumers and businesses. These startups have secured substantial funding from venture capital firms and major tech entities to tackle the hefty computing costs inherent in AI tool development.

However, it appears that the current funding landscape may be insufficient. The increasing trend of startups opting to go public suggests a growing need for additional financial resources. These are necessary to propel product development within the AI sector, beyond what private capital alone can provide.

Michael Harris, global head of capital markets at NYSE, highlighted this trend during the Information’s Private Capital Conference, stating : “Iā€™d say that the majority of the companies that are truly pure-play, AI-focused are still mostly financing themselves in the private markets. But we have seen a handful of companies that are at least exploring going through the process.”

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