Marc Andreessen, co-founder of venture capital firm Andreessen Horowitz, is bullish on the 2017 IPO market, and sees more mergers and acquisitions of private companies happening over the next few years.
"We believe that the pendulum has swung too far against going public," he said on Tuesday at the Bloomberg Technology Conference in San Francisco, noting that his firm has a team just devoted to "preparing" private companies for the public markets.
It's worth noting, though, that Andreessen has in the past touted the benefits of staying private.
So far, 2016 has been a bust for IPOs. Only one VC-backed private tech company, SecureWorks Corp., has gone public this year--raising $112 million during its April offering. Currently, there are more than 168 private companies valued at $1 billion or more, according to research firm CB Insights. Those include companies like Uber, Airbnb, and Pinterest. (Andreessen Horowitz owns shares of seven such "unicorn" businesses.)
Nevertheless, Andreessen says the future is promising. As private valuations steadily decline, he explains that big public companies (who previously held out on acquiring riskier startups) are now "going shopping" to fill in the gaps in their portfolios.
"For the last three or four years, a lot of public companies kind of sat back and watched all the drama play out in the Valley, the constant drum beat of bubble, bubble, bubble, and so there's a lot of acquisitions that should happen that just didn't happen," Andreessen said. "We see more M&A [mergers and acquisitions] activity happening in the pipeline. We see more deals in consideration, than we have in probably four years."
One example of success is Microsoft's $26.2 billion acquisition of LinkedIn announced earlier this week. Twitter is another major tech company that Andreessen said could be bought in the near future. "I'm positive there are big companies thinking about it," he said. "I'm positive Twitter is thinking about it."
The Silicon Valley investor also pointed out that successful entrepreneurs have unique attributes in common: "The difference between a hallucination and a vision is that other people can see the vision," he said, recalling the advice of an old friend. "Great founders are obsessed with the idea they've developed of what the world would be."
As society continues to progress through advances in science and technology, Andreessen says it will become a bigger challenge for investors to stay optimistic, but that it's important to keep an open mind. "We fund maybe on in a hundred of the new ideas we see," he said. "The level of effort required to keep an open mind keeps getting higher and higher."
Entrepreneurs should also try to take heart in the face of criticism. "For every big thing, experts are on the record as saying it's stupid, it's not going to work," said Andreessen.