Circle IPO Soars: A Boost for Startups?

Circle's Public Debut and Market Response

Circle, a leading global issuer of USDC – a stablecoin directly linked to the value of the U.S. dollar – concluded its inaugural day of trading as a publicly listed company with shares valued at $83.23 each.

This closing price represents a substantial 168% increase over the initial public offering (IPO) price of $31, established on the preceding day.

Investor Interest and Market Trends

The considerable increase in share value following the IPO signals strong investor enthusiasm within the public markets for cryptocurrencies, particularly stablecoins.

This heightened interest coincides with a generally favorable regulatory environment for crypto assets under the previous administration.

Impact on Future IPOs

The significant surge experienced by Circle during its first day of trading may encourage institutional investors to establish more ambitious IPO pricing for forthcoming listings.

Upcoming IPOs to watch include those of Omada Health, currently setting its price, and Chime, a disruptive banking platform scheduled to list next week.

Valuation and Capital Raised

Initially, the IPO price valued Circle at $6.9 billion.

However, this figure was lower than the company’s previous private valuation of $7.7 billion, recorded in 2021 during a $400 million Series F funding round, as reported by PitchBook.

The substantial post-IPO price increase rectified this discrepancy, bringing Circle’s market capitalization (excluding employee stock options) to $16.7 billion at the close of trading.

The company successfully raised approximately $1.1 billion through the offering.

Context within Recent IPO Trends

Circle’s experience aligns with a growing trend of companies debuting on the public market at valuations below their prior private market assessments.

Recent examples include down-round IPOs from health technology firm Hinge, contractor platform ServiceTitan, and the social networking service Reddit.

Despite this trend, the positive reception to Circle’s IPO is unlikely to deter other startups considering a public listing.

Previous Attempt and Key Shareholders

Circle’s successful IPO follows a prior attempt to go public three years earlier.

In 2022, the stablecoin issuer had planned to merge with a special purpose acquisition company (SPAC) at a valuation of $9 billion.

Major Investors

According to the S-1 filing, General Catalyst held approximately 8.9% of Circle’s stock prior to the offering, representing the largest outside shareholder position.

IDG Capital was the second-largest, owning 8.8% of all shares.

Other notable venture investors include Accel, Breyer Capital, and Oak Investment Partners.