The stock market has been unexplored territory for startups and relevant technology companies in Spain. This strong adjustment in valuations and investment experienced in the last year and a half has only raised the entry barrier even higher. With that drought still raging, the debut with strong increases of the British chip giant Arm, in the hands of the Japanese Softbank, opens the way. It is the first of many, like others such as the food delivery company Instacart or the marketing data platform Klaviyo, both valued between 9,000 and 11,000 million. The latter will act as more of a thermometer for smaller companies. They all look closely at behavior to analyze potential movements in the local market.
Arm is not exactly a startup. Just before the dotcom explosion, in 1998, the software and semiconductor design firm made its first bell ring on the London Stock Exchange. Almost two decades later, it was acquired by Softbank for $32 billion at the start of the Japanese investment career with its controversial Vision Fund. A year after negotiations with Nvidia for its sale did not bear fruit, among other reasons due to pressure from the regulator. It finally lands on the stock market. It is not a unicorn, nor the prototype of a ‘tech’ company backed by venture capital.
Investment bankers see it as a more independent milestone, which will not set very clear trends but will serve to measure the temperature of the water. The demand was between 7 and 10 times higher than the shares that have been put on the table in the takeover bid. The valuation exceeds the barrier of 60,000 million dollars after a strong rise that reached more than 17% during the first stages of the session this Thursday. This would put it with an earnings ratio of 110 times (when compared to the last fiscal year). It would be at the same level as Nvidia, although without the ambitious forecast for the coming quarters that the latter has proposed.
The thermometer shows that the temperature is beginning to rise. But most analysts limit this operation to a sector such as semiconductors, with strong warming in recent quarters due to the high demand for these products with the explosion of Artificial Intelligence (AI) and other factors. There are two others in line that will serve even more to set trends. And in both cases, the companies have tried to tread carefully after two years of strong valuation adjustments and cooling of investment. These are Instacart and Klaviyo. The first has a capitalization of 9.3 billion dollars (well below the 13 billion recently set by the firm). The second raises about 9,000 million compared to the fixed 9,500 in the last round in the summer of 2022.
Spanish unicorns like Cabify, Idealista or Jobandtalent look at the stock market from a distance
Arm opens fire for these two new IPOs to culminate the year. It is a preparation of the ground for what could come next. The club of so-called unicorns – startups valued at more than 1 billion and backed by venture capital funds – has had much fewer additions in the last two years but is still very populated. Companies such as fintech Stripe, big data giant Databricks and others have also considered ringing the bell. What happens in these first ones will depend on whether they take the step and, above all, if they do so with a little more optimism or with more caution in terms of valuation.
Spanish dry market
This ‘renaissance’ of IPOs comes with the Spanish market still dry and without much prospect of filling. The only relevant bell ringing of a startup in the last year was just before the summer and was carried out by the automated investment platform Indexa Capital in the BME Growth through a direct listing in the issuance of new shares. Today it stands at just over 150 million euros of market capitalization, practically the starting price – there was a significant increase in the premiere and the following days and a subsequent reduction. That valuation sets relatively conservative multiples with respect to the 1.7 billion assets under management.
In recent years there have been timid attempts to land on the stock market among Spanish unicorns. Cabify studied it but ultimately it was not carried out (and his CEO, Juan de Antonio, repeated over and over again that it was “an option”). Idealista has always been pointed out as a potential candidate, but until now it has been moving among venture capital investors, first with the purchase of 82.6% by Apax in 2015 for 226 million euros and then with the ‘takeover’ by EQT valuing it at more than 1.3 billion. Finally, Jobandtalent is another one that analysts consider as a candidate, although there are no short-term plans.
The park has never been a majority option chosen by Spanish startups. The exception was the electric vehicle charger manufacturer Wallbox, which landed in the United States through a ‘blank check’ company (SPAC). Traditionally, the way to provide an outlet for the investors who support them has always been to sell to third-party companies, mainly international. The last most notable is the purchase of Glovo by Delivery Hero. What happens in the United States, with Arm as the spearhead and Instacart and Klaviyo as references, will be relevant to what happens in the coming quarters.
