In the recent stock market rout, the bears feasted most ferociously on the young.
Many initial public offerings of 2015 fell harder than the overall market in the past week, with more than half of this year's IPOs trading below their debut prices as of Monday's close, according to Renaissance Capital, which manages IPO-focused exchange-traded funds.
Tech companies suffered especially hard drops. Cloud software company Box, for example, fell below $12. Etsy, the online marketplace, dropped to a new low. In total, 62 percent of tech companies that made their public debut in 2015 traded below their IPO price.
This morning, many of these same stocks are bouncing back along with the broader U.S. market as overnight easing in China boosted investor sentiment. That comes after stocks started Monday with a historic free fall.
Investors are now trying to determine how this stock market volatility impacts the private markets. One question: Will the pressure in the public markets close the IPO window?
That would be unwelcome news for venture capitalists in Silicon Valley. They've been pumping money into start-ups at a breakneck pace. In the second quarter of this year, VC investing exceeded $17 billion for the first time since 2000, according to the MoneyTree Report, a joint report fromPriceWaterhouseCoopers, the National Venture Association, and Thomson Reuters.
Ultimately, these professionals are betting on public-market debuts for companies in their portfolios and subsequent big returns on their investments.
The mobile payments company Square, for instance, confidentially filed an IPO. And, just last week, Reuters reported that ride-hailing service Uber made a presentation to Chinese investors that included plans for an IPO in 18 to 24 months.
There's also Pure Storage, which filed its IPO prospectus in August, announcing plans to raise up to $300 million. At that amount, it would be the biggest deal for a U.S. enterprise technology company this year.
Right now, VCs say it's too soon to tell whether this volatility locks up the IPO market. It comes down, they say, to whether this is a short-lived correction or the start of a more prolonged, sustained selloff.
"If it is just a market adjustment then it is not a concern because the IPO window will remain open," said Joe Horowitz of Icon Ventures, a longtime VC in Silicon Valley. However, he added that, if this correction deepened, then the IPO window could close. In other words, the verdict is still out.
But Horowitz does believe that even this recent pullback in the stock market will have some impact on valuations in the private market. He isn't alone. Other noted investors, including Benchmark's Bill Gurley, made a similar point in an eight-part tweetstorm last week.
Of course, for VCs such as Horowitz and Gurley, that could be the ideal scenario: a temporary pullback that brings down prices for start-ups, but allows more mature private companies to still go public to a receptive investor base.