As the market shows signs of life, is an IPO in the cards for Bluevine?

Within one year, the global IPO market turned from boom in 2021 to dust by the end of 2022. Factors like rising inflation and interest rates, recession fears, and geopolitical volatility adversely affected IPO activity last year. In the US alone, 1,333 IPOs raised $179.5 billion in 2022, a 45% drop and 61% by number of deals and proceeds, respectively, YoY. 

However, for the first half of 2023, US IPOs raised $10.1 billion via 63 deals, demonstrating growth of 115% and 24% from last year. While this statistic is still not close to the number of annual deals closed in 2021, it has fired up some excitement around public market investing and a cluster of companies waiting to hit the market for new opportunities and growth.

Bluevine is planning to go public – but why now?

Business banking service Bluevine is one of the companies eyeing to go public. CEO and co-founder, Eyal Lifshitz is optimistic that the fintech can position itself on the path to profitability at a time when the IPO market has started to gain ground. Additionally, the company is showing signs of expansion amid a period of economic hardship after ten years in the business. Recently, it surpassed over 500,000 customers since launching in 2013, extended over $14 billion in loans, and has crossed the $850 million mark in deposits.

The company also plans to launch a Treasury account for companies, which will provide higher yields – more than twice the 2.0% interest rate it currently offers on checking account balances.

According to Lifshitz, Bluevine is looking forward to the prospect of becoming a public company for reasons that may work out in its favor in the larger scheme of things. Firstly, it may provide a path to liquidity for investors and employees. Additionally, amid the increasing regulatory scrutiny, being public may also offer both transparency and credibility, which Lifshitz thinks is not only critically important within the banking and fintech industry overseen by regulators, but also for customers, partners, and new investors. 

“While the idea of an eventual IPO is not particularly new to our strategic roadmap, the business milestones, innovations, and sustained growth Bluevine has experienced over the past few years combined with our future trajectory has brought that long-term goal into nearer-term focus,” he said.

The filing stage won’t likely begin until the next 18 to 24 months due to a number of steps involved, according to the company, which means the actual IPO listing will come sometime after that process is complete. Meanwhile, the time in between may also present an opportunity for the company to test the waters of the current IPO market trajectory and explore a potential way forward.

“It is less about timing the markets and really about being in the right place with financials, growth, and the maturity of our digital banking platform. Going public is never the endgame – it is a milestone and strategic step in the life of the business, which we intend to be long and fruitful for all stakeholders,” added Lifshitz.

Do banks serving the SMB market pose a threat?

While Bluevine may face a number of challenges on the path to taking the company toward IPO, can banks eyeing the SMB market be one of them? Given last year’s downward pressure on non-interest income, community banks are looking to capture and capitalize on the $400 billion small and medium-sized business market, vying for their share from fintechs and other contentious deposit relationships. 

“Incumbent banks have marketed toward the small business segment for decades but the problem is that they are not ‘building’ solutions specifically for it,” said Lifshitz.

According to him, serving SMBs is a different ball game altogether that requires making significant investments in technology infrastructure, risk management, and data analytics directed toward bringing one-stop banking to market for this segment. The segment has a particular set of needs and inherent challenges that “off-the-shelf” banking may not be able to satisfy. For traditional banks, it may require a transformation of their approach – how they manage risk, design products, operate, and provide customer support specifically aimed at small businesses – which seems unlikely to occur in the near future.

“The gap that exists today is not surface level – it runs deep and cannot be solved by adapting existing solutions or remarketing them to small businesses,” said Lifshitz. 

“We know because this has been Bluevine’s singular focus – and it is not easy. We’ve been at it for 10 years, and we’re still learning,” he added.

While some expect the IPO market to recover by mid-2024, external economic forces may throw a wrench into the works, derailing the market’s comeback – consequently affecting the speed at which Bluevine wants to move forward.