Is The Next Dot-Com Era Among Us?

Insight written by Quinn Mantegari, originally published on October 7th, 2021.

These past few years have been crazy for Initial Public Offerings (IPOs). There were 232 IPOs in 2019, 480 in 2020, and so far this year there has been 777 IPOs, and it’s only October! A steady increase in the amount of companies going public can be attributed to increased investor activity due to COVID-19 and the new popular trend of special purpose acquisition companies (SPACs).

The massive uptick in IPO activity in the past few years is reminiscent of a similar phenomenon that happened in the late 1990s, just prior to the Dot-Com Crash of 2001, which caused a major stock market decline. The volume of IPOs before 1995 was fairly stable, fluctuating between 200–300 IPO’s each year. This number shot up to 486 in 1999 and 429 in 2000 (Statista). Those numbers were all time highs until they were recently surpassed by the IPO volume of the past two years.

Another trend that we saw in the late 1990s, and arguably one of the most influential trends that led to the dot com crash as a whole, was the increase in venture capital (VC) investments. In 2000, there were $119.2 billion dollars of venture capital investments in the US, which was more than the previous five years combined. This was inline with a rapid and consistent upward trend that had been in motion since 1995 (Statista). Since the crash, we have seen a similar upward trend in the amount of venture funding that is being released into the market. This upward trend is different from that of the 1990s, especially in the sense that it has been more gradual. The amount of private capital being invested today is comparable to that of 2000, but it took twenty years to reach those heights, as opposed to just five. Just this past year, we saw $130 billion of VC investment, and there are no signs of this slowing anytime soon.

When comparing IPO volume and venture funding, we can begin to see a relationship between the uptick in the amount of IPOs and an increase in venture capital. Traditionally, 10–25% of the direct listings that have occurred each year (since 2001) have been venture backed. In more recent years, this percentage has increased to upwards of 35% (Statista).

Is this upward trend of IPOs related to the increase in venture funding over the past ten years or so? If so, is this any different than what the markets experienced back in 2001? There can be a case made for both sides, but as both the public markets and the private markets begin to rely more upon each other, it is imperative that another dot com era event is avoided.


Number of Venture-Backed IPOs in the U.S. 2004–2020,

Number of IPOs in the United States from 1999 to 2020,

Value of Venture Capital Investment in the U.S. 1995–2020,

Quinn is a senior from Brentwood, NH pursuing a degree in finance. Growing up he learned important entrepreneurial skills from growing a small landscaping operation, which he still actively manages today. Quinn is also involved in Alpha Kappa Psi, the co-ed professional business fraternity at UNH. He joined the fund to gain a deeper understanding of the private equity space while working closely with the many talented individuals surrounding the fund.



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