Iconiq Capital shifts focus to M&A amid IPO drought

Iconiq Capital, a San Francisco-based investment group backed by notable figures like Mark Zuckerberg and Jack Dorsey, has recently closed a $5.75 billion venture fund, surpassing its previous fund of $4.1 billion raised in 2021. This shift comes in response to a significant downturn in public markets, which has led to a scarcity of initial public offerings (IPOs). Historically, the firm has relied heavily on public markets for value generation, having participated in around 30 IPOs over the past 11 years, but no new companies have gone public since 2021. In light of this IPO drought, Iconiq is pivoting towards mergers and acquisitions, as well as exploring opportunities in the secondary market for start-up stocks. Partner Matthew Jacobson noted that many early shareholders are seeking liquidity, creating new market opportunities. This strategic shift reflects broader trends in the venture capital landscape, where investment in start-ups has seen a notable decline. Iconiq's portfolio company QGenda recently agreed to a sale to Hearst for over $2 billion, exemplifying the firm's focus on M&A. Additionally, Iconiq is capitalizing on the growing secondary market for start-ups to release capital. While the firm acknowledges the boom in artificial intelligence attracting investor interest, it is cautious about investing in capital-intensive AI model developers, instead favoring AI application start-ups. The firm is also expanding its reach in Europe, supporting companies like Adyen and Miro, particularly in AI hubs such as Paris and London. Partner Seth Pierrepont highlighted the positive role of European governments in fostering innovation in the AI sector, indicating a strategic alignment with regions that are supportive of technological advancements.