Preparing for the Next IPO Wave

We’ll look back on 2024 as another lackluster year for IPOs. Investors are hopeful for 2025.

But we had similar excitement for 2024 this time last year, only to fizzle out with uninspiring IPOs from Rubrik, Ibotta, and Reddit (though Reddit is up 100%+ since its launch).

If 2025 is indeed the year when IPO appetite returns, how do we prepare to invest?

Three Ways to Prepare for the Next IPO Wave

Monitor Favorites

Access IPOs is monitoring more than 120 of the most intriguing startups in the world. Each week, I consume the latest startup news and update radar company pages with significant developments.

The new website design makes it easier to find interesting companies by category (e.g., AI, battery tech, climate, etc.) from the “Topics” tab on the main menu.

The ever-changing ​Upcoming IPOs​ page provides a list of IPO candidates that are most likely to debut in the next window. As companies become more likely to IPO, they move up the list.

If there’s a company you want to see public, monitor the startup page and look for pre-IPO opportunities, which are becoming more abundant.

Buy Pre-IPO

It’s extraordinary to think leading into the last IPO window (2019-2021), retail investors had few realistic options to own private companies.

But going into the coming wave, we can buy the next IPOs today via pre-IPO marketplaces. Even today, investors can still pick up pre-IPO shares of Cerebras at Linqto (+79 other startups available).

The ​Fundrise Innovation Fund​ is a lower-risk, diversified option for non-accredited investors that lets us own OpenAI, Databricks, Anthropic, Canva, Anduril, and ServiceTitan right now. Most of these companies are likely to IPO in the next window. OpenAI is already a 2X return for the fund.

​Hiive​ is another platform for more serious, accredited, and experienced investors willing to invest higher minimums. It offers access to hundreds of startups.

Here’s the latest ​best pre-IPO platform list​.

Valuation matters, so look to acquire shares at a fair or better valuation. The Hiive marketplace provides data (free) to help determine if you’re getting a fair price.

The risk/reward opportunity for owning single companies is high. But investors with strong sector or startup convictions can own tomorrow’s IPOs today.

Open Brokerage Accounts

A relatively small number of brokerage accounts offer a realistic shot at IPO access. Investors need established, funded accounts ready to go about 10 days before the first trade to be eligible to invest.

Here’s the latest ​best brokers list​.

The highest-demand IPOs will always be challenging to receive a substantial allocation.

But the brokers are finding their place amongst the issuers:

• Small-to-midsized, low-demand IPOs are relatively abundant at Webull and TradeStation/Click Markets.
• Robinhood is getting access to big-name IPOs like Reddit, Instacart, ARM, and Sweetgreen. However, its large customer base means small allocations.
• SoFi has also given access and larger allocations to substantial deals, but its overbearing flipping policy persists.
• Moomoo offers access to deals similar to what Webull is getting, plus Hong Kong and Singapore deals.
• Fidelity has many deals, but you need substantial assets to get an allocation.
• ETRADE – It had its day, but deal flow has dried up.

These online brokers are the best options to participate in IPOs. Allocations are never guaranteed. You must follow each broker’s policies to qualify and investor.

Cerebras Postponement Likely

​Cerebras​ released its S-1 to the public a few hours after my last newsletter on October 1st. Its roadshow was scheduled to begin this week.

But it shared this whopper in the filing:

Group 42 Holding Ltd (together with its affiliates, “G42”) accounted for 83% and 87%, respectively, of our total revenue for the year ended December 31st, 2023, and six months ended June 30th, 2024.

G42 is a UAE-based venture investor in Cerebras and its largest customer by far. Several analysts highlighted this risk, and the government took notice, too.

On October 8th, Reuters reported that Cerebras is likely to postpone the IPO due to a Committee on Foreign Investment in the United States (CFIUS) review. In short, the government wants to ensure there is no national security risk.

This will delay the IPO. And investors aren’t as eager to invest now, seeing such striking customer concentration risk.

However, Nvidia is still soaring, and Cerebras is a legitimate competitor with a potentially superior product in an AI demand environment that Nvidia CEO Jensen Huang calls “insane”.

Now, we are waiting to learn about the impact of the CFIUS review. That could easily push it into 2025.

IPO Radar

I write a handful of new deep dives each month, monitor the news, and update existing content when companies achieve significant milestones on the path to an IPO (raise new funds, hire CFO, file confidentially, hire bank, etc.).

​eGenesis​ — CRISPR startup is modifying porcine organs into human-compatible transplants that reduce rejection risk and supply a global medical shortage.

​Carta​ — The startup cap table SaaS is well-known among founders. An IPO could be in the pipeline when its valuation recovers.

​Northvolt​ — The European lithium battery darling is showing self-inflicted cracks in its business model and burn rate.

​Form Energy​ — The iron-air battery maker for long-term grid storage just raised another $405 million.

Featured image by Kanenori via Pixabay