How COVID-19 Fueled the 2020 IPO Boom: A Deep Dive
The COVID-19 pandemic has reshaped the global economy in unprecedented ways, with startups and venture capital feeling its impact most acutely. While some businesses struggled to survive, others thrived—accelerating their growth trajectories and fast-tracking their path to going public.
The Pandemic’s Divergent Impact on Startups
COVID-19 created a stark divide in the startup ecosystem:
- Winners: Companies like Peloton, DoorDash, and Roblox saw explosive growth as consumer behavior shifted dramatically.
- Losers: Businesses such as Toast and Airbnb faced severe headwinds due to lockdowns and travel restrictions.
This dichotomy is clearly reflected in the recent wave of IPOs, where pandemic-accelerated companies dominate the landscape.
Pandemic Beneficiaries Racing to IPO
Roblox: Gaming Goes Mainstream
With children stuck at home, Roblox experienced epic 2020 gains. The platform became a virtual playground, with parents spending on in-game currency to keep kids entertained. While Roblox warns of potential growth slowdowns post-pandemic, its timing for going public couldn’t be better.
DoorDash: Delivery Demand Skyrockets
DoorDash’s mountain of revenue growth tells the story of a nation ordering takeout instead of dining out. The food delivery giant capitalized perfectly on this behavioral shift.
Affirm: The Double Boost
Affirm benefited from both increased e-commerce spending and Peloton’s surge, as consumers financed expensive home fitness equipment through its platform. Their IPO filing reveals just how powerful this combination proved.
The Exception: Airbnb’s Pandemic Struggle
While most recent IPO candidates benefited from COVID-19, Airbnb represents the exception. The travel platform had to:
- Pause its direct listing plans
- Secure emergency funding
- Implement significant layoffs
- Rebuild with reduced Q3 revenue
Yet, analysts believe Airbnb will recover as travel resumes.
Not All Tech Companies Thrived
The pandemic’s impact wasn’t uniformly positive across the tech sector:
- Workday shares dropped 8% after reporting COVID-19 hampered new customer acquisition
- CFO Robynne Sisco noted: “Headwinds due to COVID remain… impacting us all year”
This serves as an important reminder that even in tech, pandemic effects vary significantly by business model.
Market Insights: Beyond IPOs
Brex’s Rollercoaster Ride
The fintech startup experienced:
- Pre-pandemic: 10-15% monthly growth
- Early COVID: Negative growth and staff cuts
- Recovery: Faster than expected, driven by digital transformation trends
CEO Henrique Dubugras shared insights about these challenging decisions and the company’s adaptation to remote work.
Cybersecurity Shines
Telos, a cybersecurity firm, saw strong post-IPO performance, highlighting the sector’s resilience during the pandemic. The company:
- Priced midrange with an upsized offering
- Achieved $1 billion valuation
- Performed well in public markets
SaaS Growth Trends
ProfitWell’s data shows:
- Initial COVID impact on B2B SaaS
- Subsequent acceleration in growth
- Variation by company (as Workday’s experience demonstrates)
Looking Ahead
As 2020 concludes, the IPO wave shows no signs of slowing. Key trends to watch:
- Continued divergence between pandemic-benefiting and pandemic-challenged companies
- SPACs as an alternative path to going public (e.g., Bird’s potential SPAC deal)
- How “return to normal” might affect 2020’s high-flyers
The pandemic has rewritten the rules of business growth and public offerings. While human costs remain paramount, the economic impacts will shape the startup landscape for years to come.
