Why ARM’s Upcoming IPO Will Determine if Your Startup Gets Funding

On Aug. 21, the chip designer, ARM, fled for an Initial Public Offering on the NASDAQ stock exchange. The IPO which would make the company’s stock available for public trading is likely to take place in early September. The success or failure of that IPO will determine if your startup gets funded or runs out of cash.

Whether your products use ARM chips or not doesn’t matter at all. Funding for any startup, from enterprise software to consumer goods to carbon capture rests on the success or failure of this one IPO.

ARM is a chip design firm based in Cambridge, UK. The CPU inside almost every cell phone is based on an ARM design. The same for chips inside washing machines and automobiles, as well as many PCs and cloud servers.

ARM itself is hardly a startup. Originally spun out from Acorn Computer (anyone remember them? in 1990 with investment from Apple to develop chips for their Newton disaster. ARM had an IPO on the London Stock Exchange in 1998 and was even a component of the FTSE 100 index when Softbank acquired the company in 2016 for $32 billion.

The company, which currently earns $671 million on $2.68 billion in revenue, is expected to be valued at between $60B and $70B in the upcoming IPO.

This massive windfall to SoftBank and its $200 billion Vision Fund investment arm, the world’s largest startup investor by far, will be a much-needed redemption after the humiliation of WeWork and other big, ill-conceived investments that lost it tens of billions of dollars.

But none of that matters to you, the startup founder, and to me, the startup investor. What matters is simply whether ARM’s stock skyrockets to the moon or plummets to earth when it starts trading to the public. Because that will determine if the next wave of unicorns follows ARM in going public, or is forced to continue raising money privately without providing a return to earlier investors.

During the boom years, investors threw money at startups to see them be acquired or go public quickly. In 2021, companies raised $156 billion…

SOURCE: https://entrepreneurshandbook.co/why-arms-upcoming-ipo-will-determine-if-your-startup-gets-funding-7481543a818b?source=rss—-7adf33e44ae3—4 https://entrepreneurshandbook.co?source=rss—-7adf33e44ae3—4