Tech IPO Performance — what the data says
When an employee at a tech company like Anthropic or SpaceX reaches out to us at Prospero about tender offers and potential IPOs, here’s some data we might share with them.
If you’re sitting on pre-IPO equity, the findings are worth a few minutes of your time.
Jay Ritter at the University of Florida maintains what is probably the most comprehensive dataset on IPO performance. The following data covers tech IPOs from 1980 through 2023, excluding the internet bubble years of 1999–2000 (which would skew everything). It’s broken down by two variables: profitability at IPO and revenue scale (above or below $100M in sales).
Also, since we tend to focus on employees with equity, we focus on returns from offer price (a lot of IPO research and content out there is geared towards retail investors, and focuses on returns from first day closing price, so this is worth calling out).
What the data shows:
Day 1 pops are real. Unprofitable tech companies actually pop more on Day 1 (~23%) than profitable ones (~17%). It seems counterintuitive at first glance, but there are several likely explanations for this. It’s worth pointing out that being unprofitable can lead to more caution in setting the offer price, creating more potential for a ‘pop’ and positive return for the clients of the bank leading the IPO.
Three years out, profitability and scale matter more. Profitable companies with over $100M in revenue lead at roughly 91% average buy-and-hold returns. Small unprofitable companies? About 63%. That’s a 28-point gap — same holding period, very different outcome.
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Large unprofitable companies (~72% buy-and-hold, ~42% vs. market) actually performed much closer to profitable companies than to their smaller unprofitable peers. Revenue scale appears to be doing a lot of the heavy lifting.
The gap holds after adjusting for style and market. IPO performance means little in a vacuum. Employees with equity care about relative performance, so it’s worth noting that tech IPOs have historically outperformed the market on a 3 year basis. Furthermore, they have historically outperformed similar peers too (see the “style adjusted” returns).*
So what does this mean if your company is approaching an IPO?
The most important question isn’t what the stock does on Day 1. It’s not even whether your company is profitable or at scale (though as you can see, that matters quite a bit).
The real question is how much of your net worth is riding on the answer.
If 80% or 90% of your wealth is concentrated in a single company’s equity, it almost doesn’t matter which category your company falls into. You’re making a massive, undiversified bet — and even a 91% average return has a wide distribution of outcomes underneath it.
Good data helps you think clearly. But no dataset changes the math on concentration risk.
* Per Ritter: “Style adjustments use firms matched by market cap and book-to-market ratio with at least five years of CRSP listing and no follow-on equity issues in the prior five years. Specifically, the firm with the closest book-to-market ratio within the size decile of the IPO is used for the matching firm.”
Source: Jay Ritter IPO data (Table 16c, updated April 2025), University of Florida. Tech IPOs 1980–2023, excluding 1999–2000. Returns measured from offer price.
