Etsy’s IPO was roughly 10 years in the making. Is that a long time or a short time?
Not surprisingly, the answer depends on which set of initial public offering data you look at—and how you look at it.
For example: A glance at the historical chart from Renaissance Capital, manager of IPO-focused ETFs, reveals that 10 years is actually the average age of all 63 companies that have filed for IPOs so far in 2015.
Not only that, but the average age of 10 years is the youngest average age in recent years—by far:
Year Average Company Age in Years at IPO
2010 16 (253 companies)
2011 15 (258 companies)
2012 20 (140 companies)
2013 16 (256 companies)
2014 16 (365 companies)
2015 10 (63 companies so far)
Granted, 2015 is still young. But if the trend established in the first quarter holds up, then it’s accurate to say Etsy’s 10-year span from birth to IPO is fast, compared with historical IPO ages.
And it’s also accurate to say Etsy’s age-at-IPO is average for the IPO class of 2015.
Mind you, all this is just one set of IPO data. The numbers change in an interesting way when, instead of looking at all IPOs, you look only at the subset of venture capital–backed IPOs. (Etsy, having raised nearly $100 million in angel and VC cash prior to its IPO, is among that group.)
When you look at VC-backed IPOs, you can see another clear trend: The mean time in years for VC-backed startups to exit via IPO has increased. In 2010, the mean time was 5.9 years. In 2013, the mean time was 8.1 years. One important note: These numbers reflect time from first funding, as opposed to company inception.
Year Avg. Years to IPO No. of IPOs Avg. IPO Amount
2010 5.9 70 $111 million
2011 7.0 51 $210 million
2012 7.8 49 $438 million
2013 8.1 81 $137 million
Source: 2014 NVCA Yearbook, p. 73
These data make it clear that it’s taking longer for VC-backed companies to IPO. And the trend appears to have held steady in 2014. In a column for Forbes, Bruce Booth dissected the ages of 2014’s VC-backed IPOs in biotech and software. The mean age (again, from first funding to IPO) of VC-backed biotech companies who had an IPO in 2014 was 7.4 years. For software companies, it was 8 years.
So any way you slice it, you’re still talking about at least a seven-year span between first funding and IPO.
In some prominent 2015 IPOs, the span was longer than seven years. Etsy, first funded in 2006, had a nine-year span. Box, the online storage provider that went public Jan. 22, also had a nine-year span. It was founded (and backed by Mark Cuban) in 2005, and VCs first funded it in 2006.
Of course, there are some recent IPOs whose spans were shorter than seven years. Shopify, the e-commerce software company that went public earlier this week, was founded in 2004, but its first funding came in 2010. Likewise, Hortonworks and New Relic—two VC-backed software companies that went public late last year—also had shorter-than-seven-year spans from first funding to IPO.
So if you’re wondering whether Etsy’s time to IPO is long or short, the answer is just three words long: compared with what?