Bankers, according to Ben Narasin, are like penguins on an ice floe. They waddle over to the water and take a look at the fish—hungry, but wary of the sea lions and seals that want to eat them. Eventually, one slips and falls into the water, coming back with a fish, unscathed. The rest slide down the ice. “That’s what the IPO market is going to be,” Narasin told me. Once the first few succeed, likely early next year, bankers will bring an avalanche of startups to the public markets.
Narasin is the founder and general partner of the seed-stage-focused Tenacity Venture Capital and a former partner at New Enterprise Associates, so his extensive experience with the tech lifecycle gives him a claim to the assessment, even if it isn’t the most flattering of the profession (Narasin said he uses the same one for VCs.) “An unlimited number of penguins, piling into the ocean,” as he put it.
We met on Tuesday morning ahead of the election, and Narasin was clearly ready to unload—his scheduled appearance on CNBC had just been bumped in favor of election coverage. I had asked him whether either candidate would finally break open the exit clog for startups, but even before we knew the winner, he said it wouldn’t matter. “Next year is going to be a bonanza for IPOs,” he told me.
In Narasin’s view, there were a few simple reasons. For one, nobody likes uncertainty, and the election unlocks more confidence. Sure, Trump winning probably means that regulators will be more open to M&A, but it made sense for startups to wait, regardless of the result. For another, bankers are opportunists and don’t want to keep pushing out the lucrative business of IPOs. And finally, nothing happens until January. “Not because of the election,” he said. “Just because this is a shit year.” So there you go.
I spoke with Gene Frantz—a general partner at Alphabet’s independent growth fund, CapitalG—and he echoed similar sentiments, albeit with fewer animal metaphors. Frantz has helped shepherd major tech IPOs including CrowdStrike and Freshworks and has stakes in late-stage companies like Monzo and Expel that will likely soon explore the option.
Frantz said that much of the reluctance in today’s markets comes from the sell side, with companies hesitant to plunge into IPOs for myriad reasons, from economic uncertainty to the robustness of secondary markets, which make it easier to stay private for longer.
In conversations with his portfolio companies, Frantz said that many are ready to go public but have been waiting for the right conditions. “All companies want to go public, in theory, and it’s really a question of ‘What does the timing look like?’” he told me. “It’s just a question of when theory converts to reality.”
Frantz divides IPO appetite into three stages. The first is the “sober and clinical” phase, which we’re currently in. Companies are going public, but cautiously. Next is the “lean in” stage, where momentum builds alongside an investor appetite for public securities. Finally comes the inevitable bubble, where everything can sell. The third stage, of course, typically doesn’t end well, and after a freeze, the cycle begins anew.
With interest rates coming down and a more hands-off approach to regulation with a Republican administration, Frantz expects the “lean in” phase to come sooner rather than later. His guess? The second quarter of 2025. Prepare your road shows.
Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
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