No profit necessary for IPO? Cybersecurity startup steps up

Plus: Our flagship reports on Q1 VC, PE data ask what's next for the private markets

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Rubrik has filed to go public, following on the heels of the successful IPOs of Reddit and Astera Labs. Unlike those companies though, the Bay Area-based startup is increasingly unprofitable. For investors, the upcoming IPO is a test of whether the old rules of growth-over-profitability still apply.

The information security startup's losses widened from $277.7 million to $354.2 million despite generating $627.9 million in revenue, reports PitchBook's Jacob Robbins .

Cybersecurity remains one of the top verticals for expected returns for early-stage deals, according to PitchBook data. But the sector isn't immune to greater VC trends: Information security startups brought in less than $7.5 billion in exit value in 2022 and 2023 combined, after topping $30 billion in 2021.

Depending on how the IPO is received, some companies may decide to speed up their public listing plans.

"There are so many companies waiting in silence to see how the market is going to come out, how this is going to go," said Forgepoint Capital co-founder and managing director Alberto Yépez.

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PE extends slide in share of M&A activity

Recent improvements in liquidity and wider economic conditions herald a potential rebound in M&A dealmaking this year. However, whether PE will participate in the upside of a broader M&A recovery and break its exits logjam remains to be seen, according to our Q1 2024 US PE Breakdown, sponsored by Alter Domus and Azurite Consulting.

In 2023, PE's share of M&A deal volume dropped to less than 40% from 44% in 2022, reversing a trend of eight years with a growing share, and that slide has continued this year. The report breaks down deal trends and offers insights on when PE dealmaking and exit activity could spring to life.

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Where does VC go from here?

For LPs, distributions are what matter, and our data shows how low those realized returns have dropped during the market slowdown.

One datapoint that stands out in our Q1 2024 PitchBook-NVCA Venture Monitor is that just $9.8 billion in new fund commitments were closed—or only 5% of 2022's annual high. With little capital to recycle into the market, LPs have come under further pressure in navigating their exposure to VC, according to the report, sponsored by J.P. Morgan, Dentons and Deloitte.

While the IPOs of Reddit and Astera Labs grabbed the spotlight during the quarter, total exit value reached just $18.4 billion—dampening the outlook of an increase in distribution rates just yet.

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• Monad Labs hits unicorn status with a $225 million Series A, in a win for the chilled crypto sector .
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• PitchBook Benchmarks offer the latest fund data across PE, VC and more.
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