IPO market gets boost from Circle's 500% surge, sparking optimism that drought may be ending

IPOs had a big month in June, with five offerings in the U. , up from a monthly average of two since January, according to data from CB Insights

Coupled with Meta's announced $14 billion investment in Scale AI, IPOs duced much-needed returns for Silicon Valley venture capital firms. "The IPO market is starting to open and the VC world is cautiously optimistic," said Rick Heitzmann, a partner at venture firm FirstMark

NYSEFor over three years, venture capital firms have been waiting for this moment

And Europe turned away potential buyers

In all, there were five IPOs last month, accelerating from a monthly average of two since January, according to data from CB Insights

The stock got a big boost in mid-June after the Senate passed the GENIUS Act, which would establish a federal framework for U

Dollar-pegged stablecoins

Silicon Valley stalwarts Greylock, Kleiner Perkins and Sequoia Capital are set to soon fit from Figma's IPO, after the design software vendor filed its public spectus on Tuesday

It's "refreshing and something that we've been waiting for for a long time," said Eric Hippeau, managing partner at early-stage venture firm Lerer Hippeau, regarding the exit environment. "I'm not sure that we are confident that this can be a sustained trend yet, but it's been very encouraging. "Another positive sign for the industry the past couple months was the performance of artificial infrastructure vider CoreWeave, which went public in late March

Without handsome returns, there's little incentive for limited partners to put money into future funds

Venture-backed IPOs raise $60. 4 billion, according to data from University of Florida finance fessor Jay Ritter, every year since has been relatively dismal

As the lower-growth environment ext into years two and three, venture firms faced increasing pressure to return cash to investors. 'Backlog of liquidity'In its 2024 yearbook, the National Venture Capital Association said that even with a 34% increase in U

It's a troubling dynamic for the 58,000 venture-backed companies that have raised a total of $947 billion from investors, according to the annual report, which is duced by the NVCA and PitchBook. "This backlog of liquidity drought risks creating a 'zombie company' cohort — es generating operational cash flow but lacking credible exit spects," the report said

Other than Circle, the crop of IPOs mostly consists of smaller and lesser-known brands

Meanwhile, the highest valued SpaceX, Stripe and Databricks remain on the sidelines, and AI highfliers OpenAI and Anthropic continue to raise massive amounts of cash with no intention of going public anytime soon

Still, venture capitalists told CNBC that there are plenty of companies with the financial metrics to be public, and that more of them are readying for the cess. "The IPO market is starting to open and the VC world is cautiously optimistic," said Rick Heitzmann, a partner at venture firm FirstMark in New York. "We are preparing companies for the next wave of public offerings. "There are other ways to make money in the meantime

Secondary sales, a cess that involves selling private s to new investors, are on the rise, allowing early employees and investors to get some liquidity

And then there's what Mark Zuckerberg is doing, as he tries to position his company at the center of AI innovation and development

Mark Zuckerberg, chief executive officer of Meta Platforms Inc. , during the Meta Connect event on Wednesday, Sept

Bloomberg | Bloomberg | Getty ImagesLast month, Meta announced a $14 billion bet on Scale AI, taking a 49% stake in the AI startup in exchange for poaching founder Alexandr Wang and a small group of his top engineers

The deal effectively bought out half of the stock owned by investors, leaving them with the opportunity to make money on the rest of their holdings, should a future acquisition or IPO take place

Investors now hope the Federal Reserve will move toward a rate-cutting campaign, though the central bank hasn't committed to one

There's also optimism that regulators will make going public less burdensome

Last week, Reuters reported, citing sources familiar with the matter, that U

Stock exchanges and the SEC have discussed loosening regulations to make IPOs more enticing

Mike Bellin, who heads consulting firm PwC's U

IPO practice, said he anticipates a diversity of IPOs across sectors in the second half of the year

According to data from PwC, pharma and fin were among the most active sectors for deals through the end of May

While the recent trend in IPO activity is an encouraging sign for investors, potential roadblocks remain

Tariffs and geopolitical uncertainty delayed IPO plans from companies including Klarna and StubHub in April

Neither has vided an on when they plan to debut

FirstMark's Heitzmann said the path forward is "not at all," adding that he wants to see a strong quarter of economic stability and growth before confidently saying that the market is wide open

Additionally, other than CoreWeave and Circle, recent IPOs haven't had big pops

Hinge Health, Chime and eToro have seen relatively modest gains from their offer price, while Omada Health is down

But virtually any activity beats what VCs were experiencing the last few years

Overall, Hippeau said recent IPO trends are generally encouraging. "There's starting to be kind of light at the end of the tunnel," Hippeau said