• Smart Cash
  • Performance
  • Log in
  • Get Started
ResearchThe Weekly (12/22)

The Weekly (12/22)

Dec 22, 2023

IPO markets have been a bit of an oddity lately.

It feels like we have been hearing rumors of massive tech companies “waiting in the wings” to test the public markets for well over two years now. And yet, they’ve largely stayed there.

So far, 96 IPOs have raised $18.8 billion in 2023, according to Renaissance Capital. It’s better than 2022 which saw an unimpressive $7.7 billion in IPOs but still well off the historical ~$50 billion average.

Taking a peek under the hood, it’s interesting that the vast majority of the recent and rumored IPOs have been consumer oriented:

  • Instacart 

  • Reddit

  • Cava

  • Birkenstock

  • Skims

  • SHEIN 

  • Golden Goose

The key non-consumer companies:

  •  ARM

  • Klaviyo (technically consumer adjacent)

It’s a divergence away from what venture capitalist and private equity firms are typically funding: the vast majority of investment goes towards SaaS companies with a “focus on recurring B2B revenues”.

Something doesn’t add up. Consumer companies are undoubtedly difficult to scale but their upside can be tremendous.

It makes us wonder: why are the public markets open to consumer companies but not enterprise SaaS?

We see two plausible reasons: (1) the macro and (2) profitability 

1.) Macro

Business customers have shareholders; consumer customers don’t. When rates go up, businesses prefer short-term profit over long-term investment, so (among other things) they cut SaaS spend.

On the other hand, consumers generally don’t care too much about rising rates. Some consumers may feel the impacts but, on the margin, consumers still spend and they certainly don’t have a board of directors telling them to put their wallets away.

2.) Profitability

Consumer companies are often accused of having bad unit economics, because of having to acquire each customer individually, at a smaller average purchase size compared to their enterprise peers. This is, in many cases, wrong. 

Sure, consumer companies have to acquire customers individually, but they do not have to employ the sales teams that SaaS companies require. For consumer companies, sales and marketing costs are a manageable expense (to Facebook and Instagram), not headcount.

Many successful enterprise SaaS companies have multiple year payback periods while the best consumer companies are usually profitable (gross) on the first order. SaaS companies are structured to be profitable far into the future, whereas consumer companies can often be profitable *now*. 

This vision of the future that is increasingly uncertain may be contributing to the lack of SaaS IPOs. 

So if private investors are largely funding SaaS companies, which will change first: the IPO markets, or private market investors’ mindsets?

Have a great weekend,

— Your Titan Team


As of writing, META is a holding in Titan Flagship.

Cash Management

Smart Cash

Smart Cash FAQs

Cash Options

Get Smart Cash


© Copyright 2024 Titan Global Capital Management USA LLC. All Rights Reserved.

Titan Global Capital Management USA LLC ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept and agree to Titan’s Terms of Use and Privacy Policy. Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities or investment products. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are hypothetical in nature and may not reflect actual future performance. Account holdings and other information provided are for illustrative purposes only and are not to be considered investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services.

Please refer to Titan's Program Brochure for important additional information. Certain investments are not suitable for all investors. Before investing, you should consider your investment objectives and any fees charged by Titan. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested, including principal. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members of FINRA/SIPC. For more information, visit our disclosures page. You may check the background of these firms by visiting FINRA's BrokerCheck.

Various Registered Investment Company products (“Third Party Funds”) offered by third party fund families and investment companies are made available on the platform. Some of these Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. Before investing in such Third Party Funds you should consult the specific supplemental information available for each product. Please refer to Titan's Program Brochure for important additional information. Certain Third Party Funds that are available on Titan’s platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund.

The cash sweep program is made available in coordination with Apex Clearing Corporation through Titan Global Technologies LLC. Please visit www.titan.com/legal for applicable terms and conditions and important disclosures.

Cryptocurrency advisory services are provided by Titan.

Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.

Contact Titan at support@titan.com. 508 LaGuardia Place NY, NY 10012.