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There have been twice as many tech IPOs in 2018 as there were at this point in 2017

DocuSign and Smartsheet are the latest to take the public plunge.

DocuSign leadership on IPO day at Nasdaq DocuSign

This spring has been a boon for the tech IPO.

The IPO market grew even hotter on Friday as two highly valued companies — the electronic signature startup DocuSign and the software company Smartsheet — began trading and saw their share prices jump 30 percent to 40 percent. That’s just what bankers shoot for when executing public listings.

Those two join 15 other tech companies that have debuted on the public markets in 2018 — more than double the number of companies that went public at this point last year, according to IPO research company Renaissance Capital.

DocuSign CEO Dan Springer told Recode that there still aren’t enough software companies at a big enough scale to function as independent, public companies. That means there’s a lot of demand for the few that are.

“If you’re in a reasonable growth position,” Springer said in an interview, “you’re not going to struggle to attract investor interest.”

The IPO market can be perhaps unfairly defined by the most prominent companies that are seen as bellwethers for the tech industry overall. In the first four months of 2018, the two companies that startups and investors are watching closely have been Dropbox and Spotify.

  • Spotify opened earlier this month, trading at $165.90; its share price has fallen by about $6 since then. But the surprise here has been how stable Spotify stock has fared despite executing an unorthodox technique known as a direct listing that increases the likelihood of volatile stock prices since bankers aren’t involved in setting the initial price. The stock has bottomed out at $135 and now trades at about $160. Pretty standard performance.
  • Dropbox has had to battle doubters for years who felt that the storage company, last valued on the private market at $10 billion, was overpriced. But a month after its IPO, the company’s market cap is now at about $11.8 billion. Delaying and delaying its venture onto the public markets might not have been such a bad idea.

The 16 IPOs this year (excluding Spotify, which didn’t raise any money) generated $8.3 billion for the companies. That figure was only $4.4 billion by this point in 2017, according to Renaissance Capital.

Which brings us to today, when two companies that seem like they’ve been around forever finally took the IPO plunge.

Smartsheet, founded in 2005, traded up 30 percent on its first day of trading.

And DocuSign, founded two years earlier in 2003, saw its share price jump 37 percent after waiting over a decade to go public. It closed Friday with a market cap of about $6 billion.

Springer said they made the decision about six months ago to go public, but that since then he’s certainly been tracking companies like Dropbox, which he considers to be a comparable cloud business. (He and Dropbox CEO Drew Houston also happen to live in the same building in San Francisco.)

The big consumer IPOs are still a year away — Airbnb and Uber have said they are preparing for listings in 2019, not 2018. It’s unclear if the CEOs of a pair of other highly valued companies — SpaceX and Palantir — will ever release control by going public. And the rush of money available through giants like SoftBank’s Vision Fund may delay IPOs from SoftBank portfolio companies like WeWork.

So attention in the second half of the year will likely shift to unicorns like Lyft, which according to some sees a reason to list publicly before its rival Uber, and more dependable enterprise startups like SurveyMonkey and Domo.

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