Market Roundup: Brazilian startups should not be aiming for an IPO

An IPO should not be the ultimate goal of Brazilian startup founders

One of the main discussions at the center stage of Web Summit Rio 2024, which ran until last Thursday, revolved around the possible resumption of initial offerings and what it means for tech-based companies. 

State of play. The premise of the panel, mediated by The Brazilian Report editor-in-chief Gustavo Ribeiro, is that the market is expected to start a rebound this year. 

Backdrop. The liquidity boost promoted by central banks and governments to prevent economies from stopping during the peak of the Covid-19 pandemic also helped to intensify the size and the number of IPO operations. The high interest rates put in place in the subsequent period to fight inflation pushed investors away. Although slower than expected, the new cutting cycle could help get companies back to their IPO plans. 

Yes, but… The two experts in the conversation, Fabiana Fagundes, founding partner at FM/Derraik, and Marcello Gonçalves, managing partner at Domo.VC, put such expectations to rest. 

• “Bankers I spoke with to prepare for this session said they expect a rebound between the fourth quarter of 2024 and the first three months of 2025, but with IPOs at different valuations than in 2021,” said Ms. Fagundes.
• By different, she means way bigger valuations. “The math is done backward: how much liquidity needs to be in the market for the company to have a correct valuation? They understand that we need 20...