Natallia Ablazhei/Reuters
They're examples of ompanies that priced themselves for perfection, but finished the year with less than perfect growth, says Anand Sanwal, CEO and co-founder of CB Insights.
His company analyzed the technology landscape and came up with a list of 531 companies that are in the tech IPO pipeline for 2016, according to a new report from the data firm.
Of those, 19 are in what Sanwal considers the "dragged-to-IPO" category.
"We're sort of at a time where we haven't seen these private market valuations before," Sanwal said. "These valuations are fine but they're predicated on lots of future growth. But if that future growth doesn't materialize, it's tough to justify that valuation."
The 19 companies on Sanwal's list all have similar traits: their valuations are huge, and there's often a public market comparison that now shows how out-of-place their private valuations are. It's putting the companies in a precarious position, and like Square, their only chance of an exit and raising more cash may be to go public.
"If you're a company, you're thinking I can either take this down round, or do I get dragged to the altar and just go public?" Sanwal said.
Three examples
In the case of Dropbox, the file storage company has raised more than $1 billion at a $10 billion valuation, but hasn't raised any new cash in 2015. It recently shuttered some of its largest acquisitions and projects, including Mailbox and Carousel. And the biggest deciding factor is that its competitor, Box, went public with a lower valuation. With Box's market cap around $1 billion, Dropbox would need to be doing 10 times the revenue (and it isn't... as far as we know).
"When you look at Box's valuation, against Dropbox's valuation, if those publicly rumored numbers are correct, then their valuation is way out of whack compared to Box. All of those sort of negative factors that kind of indicate that they may be forced to go public," Sanwal said.
Cloudera is in a similar position now that it faces a public market comparison with Hortonworks, which also had a less than stellar market debut.
That doesn't mean everyone being "dragged-to-an-IPO" is being brought down by foes having gone public before them.
Jawbone faces the opposite problem. Its public market comparison, Fitbit, has done well since going public. It could have meant that Jawbone was a valuable company, but the startup has failed to raise money, had layoffs, took on debt, and faced product issues.
"Jawbone is the example of just having bad news after bad news," Sanwal said. "In their case, Fitbit's success is almost an indicator of their [Jawbone's] problems."
Regardless of whether they're dragged to the market looking for a cash infusion or happily finding new greener pastures, the market for tech IPOs in 2016 is only looking better and better.