What’s the deal with all the deals? Why the market for IPOs, venture capital and acquisitions is red hot

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Another day, another deal.

Keeping up with the flurry of acquisitions, IPOs, SPACs and venture capital these days is no easy task. In fact, IPO dollar volume for 2021 has already reached $171 billion, surpassing the record totals of last year. Same goes for mergers and acquisitions, with record levels of deal activity tracked for 2021.

Ben Gilbert, co-founder of Pioneer Square Labs and co-host of the podcast Acquired.

The money is certainly flowing.

Washington state now boasts 11 “unicorns” — privately held companies boasting valuations of $1 billion or more. Many of them — including Highspot, Zenoti and Outreach— have raised venture capital rounds of $150 million or more in the past six months. And each day here at GeekWire we’re updating our funding list — not blinking an eye when a company announces $30 million, $40 million or $50 million in new funding.

Even more, we’ve tracked 33 IPOs, SPACs and acquisitions involving Pacific Northwest companies so far this year, including blockbusters like Okta’s $6.5 billion purchase of authentication ID startup Auth0 and Twilio’s $850 million acquisition of business texting startup Zipwhip.  (See full list of deals here).

To help put the wild market in perspective, we’re joined this week on the GeekWire Podcast by Ben Gilbert, a co-founder at Seattle venture capital firm Pioneer Square Labs and the co-host of the Acquired podcast, an in-depth show that discusses the ins and outs of acquisitions and recently ranked as the number one tech show on Apple Podcasts.

Listen below, subscribe in any podcast app, and keep reading for highlights.

Here are some highlights from Gilbert’s remarks.

  • On Federal Reserve policy sparking deal activity: “You sort of can look at the supply-demand equation and see that with low interest rates means that it’s more attractive to invest in things like equities stocks.”
  • On why this is a good time to create and sell a company: “On the financing side, there’s more money than ever available to you as a founder, because people have found investing in venture capital as an asset class or anything that touches tech companies to be a great place to invest.”
  • On why acquisitions continue amid threats of big tech regulation: “I think tech companies have been playing a little bit of a game of chicken where they’re thinking, unless I do something really flagrant like Facebook trying to go by another Instagram, you know, making an offer for TikTok or something like that, I’ll probably be fine.”
  • On why tech valuations are soaring: “If you look at the average multiple of revenue that a given software-as-a-service company is trading at in the public markets, it used to be like 10 to 15. Now it’s like 20, to 25…. And that is partially driven by the macro economic stuff that we opened this with where people are just saying: ‘Hey, I believe in the future of these tech companies a lot more than I believe in sort of old world, industrials.’ Or potentially just: ‘Hey, I have way too much cash. And so I’m willing to pay more to own a tech stock, because if I look around at all the other stuff I could own, this seems like it has the brightest future in front of it.’”
  • Predictions for deal activity: “I do think we are going to continue to see very large acquisitions…. With as richly valued as a lot of these companies are right now, looking at their market caps going: ‘Geez, we should use our stock as currency for something.’ We are going to continue to see a record pace of deals getting done, and a lot of stock deals because of that.”

Podcast edited by Curt Milton; Music by Daniel L.K. Caldwell.

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