Twitter effect? Expect a barrage of tech IPOs, experts say
If you thought 2013 was a big year for tech IPOs, you ain't seen nothing' yet.
Thanks to a recent string of successful tech IPOs and a market that looks full of promise, investors should expect an uptick in the number of tech companies going public next year, industry experts say.
"There is a strong showing of bellwether companies coming out into the market, and that momentum will carry us forward," said Bryan McLaughlin, a partner in PwC's Silicon Valley deals practice.
Call it the Twitter effect
Since Twitter's public offering last week, a number of names—including Square, Box.com and Seamless—have been floated in the media as planning to file an IPO next year.
(Read more: Twitter IPO sparks speculation on who could follow )
And while companies may not be basing their IPO future on Twitter's debut, that offering probably has influenced how they're gauging the market.
(Read more: Five memorable tech IPO moments )
"The recent success of tech IPOs, from Twitter to even a company like Tableau is showing a strong demand from the investing public for these companies," said Adley Bowden, director of analysis for PitchBook Data, a private equity and venture capital research firm. "The markets are also currently doing very well, so it's an attractive time to go public."
This has been a strong year for tech IPOs, with 28 completed, according to PitchBook's data. By year's end, the number is likely to match or pass the 31 done in 2012, Bowden said.
In fact, 10 tech companies have registered their IPOs, and a number with large valuations and significant capital are potential candidates, he said. Not to mention that more tech companies could be planning to go public but are following Twitter's lead in keeping their intentions private under the JOBS Act.
(Read more: Tech IPOs 'beginning to bubble up,' says Art Cashin )
"Based on the current rate of IPOs, the potential number of IPO candidates and the healthy demand for these offerings, I fully expect to continue to see a similar level of tech IPOs to what we have seen the last couple of years, and actually see a strong chance" for the number to reach between 40 and 50 range," Bowden said.
The new normal
But more tech IPOs on the horizon may be a cause for concern, according to Aswath Damodaran, professor of finance at New York University's Stern School of Business.
(Read more: Want to invest in IPOs? Here's what to know )
If market conditions continue, more tech companies—specifically Web businesses that rely on online ad revenue—could file for IPOs, he said. And if they are all valued like Twitter, investors should be worried.
"Investors need to be asking themselves, can all these companies coexist at the same time and make as much money as they are making now?" Damodaran said. "There will be winners and losers. It could be Twitter, Facebook, Google or someone we haven't heard of yet."
(Read more: Hashtag creator: Don't expect a flood of tech IPOs)
McLaughlin said that the increased IPO activity doesn't reflect frothiness but the market.
"We are generally seeing something like 10 to 15 tech IPOs a quarter, that actually seems like the new norm in a sense," he said. "Of course you are going to end up with really popular IPOs, which can skew valuations or cash that flows in the quarter, but if you take a broader look at tech IPOs, it looks like a new like a strong and stable market."
Most tech companies leading the IPO shift are enterprise rather than consumer-focused, said Anand Sanwal, founder and CEO of CB Insights, which collects venture capital and angel investment data.