The return of IPOs in 2023 was less of a boom and more of a litmus test. After a two-year drought, investors didn’t rush to chase frothy multiples—they walked in with discipline, cautious underwriting, and clear skepticism around inflated growth stories. In a market shaped by rising rates, tighter capital, and warier public market sentiment, the question wasn’t who could list. It was who should.

Many expected 2023 to reawaken the IPO pipeline. What emerged instead was a select handful of listings—each a case study in timing, execution, and market reception. Arm came with scale and symbolism. Birkenstock arrived with legacy and brand loyalty. Instacart brought metrics, but faced hard questions on sustainability. Together, they painted a picture not of exuberance, but of restraint. Institutional capital is no longer rewarding momentum—it’s pricing fundamentals and punishing anything short of conviction.

Let’s break down what these 2023 IPOs really revealed—not just about company readiness, but about investor priorities in a recalibrated market.

2023 IPOs Show Market Timing Still Rules the Game

In theory, the window had reopened. By mid-2023, equity markets had stabilized, tech valuations recovered from 2022 lows, and VIX hovered below 15. But deal flow remained sparse. Why? Because timing an IPO isn’t about macro indicators—it’s about narrative alignment, investor positioning, and comparative appetite.

Arm’s September listing was the first big test. Its return to the public markets, post-SoftBank, was billed as a tech revival moment. It priced at $51 per share—valuing the company at over $54 billion—but traded modestly higher in the first few days before settling back around offer price. It wasn’t a flop, but it wasn’t a breakout either. The message was clear: this market would support high-quality assets, but not at stretched valuations.

Instacart (Maplebear Inc.) followed soon after. Despite once being valued at $39 billion in private rounds, it priced its IPO at a conservative $30/share, implying a ~$10 billion valuation. Its shares popped briefly, then faded. Investors weren’t buying the pandemic-era growth story—they were testing the economics of post-COVID demand. By year-end, Instacart was trading below its IPO price.

Contrast that with Birkenstock. The German shoemaker entered the public markets with consistent profitability, global brand recognition, and strong consumer loyalty, but still saw a muted reception. Despite backing from LVMH-affiliated L Catterton, the market hesitated on its ~$9 billion valuation. It wasn’t about revenue—it was about pricing power, margin durability, and cyclical exposure in a cooling consumer environment.

What connects these three? Each IPO was carefully timed, but only partially rewarded. That’s because timing alone no longer guarantees demand. Investors want a narrative that matches the macro, a balance sheet that can absorb shocks, and a growth plan that doesn’t feel stuck in 2021.

Arm’s IPO: A Bellwether for Tech Valuations—and LP Patience

Of all the 2023 IPOs, Arm carried the most strategic weight. It wasn’t just another tech listing—it was a barometer for how public markets were pricing long-term, low-capex, royalty-based tech models. Arm’s revenue was relatively flat going into the IPO, but its role in global semiconductor architecture gave it defensible margins, high cash flow, and geopolitical relevance. Still, institutional investors demanded pricing discipline.

SoftBank’s decision to retain over 90% of the shares was telling. The float was small, and that lack of supply helped stabilize initial trading. But many asset managers viewed it as a liquidity event for SoftBank, not a growth opportunity for new shareholders. That sentiment restrained buying interest beyond initial allocations.

More importantly, Arm’s IPO showed how the IPO process has shifted. Lead underwriters—Goldman Sachs, J.P. Morgan, and Barclays—tested valuation appetite extensively in pre-marketing. Books were covered early, but at a price point far below SoftBank’s desired outcome. The company may have listed at $51, but reports suggest initial ambitions ran closer to $60–$70. The gap between private and public market pricing remained wide, and that matters for LPs tracking NAVs on late-stage crossover positions.

Arm also served as a reality check for other chip-related firms considering IPOs. With AI and compute infrastructure driving sector tailwinds, some expected a wave of follow-ons. But Arm’s subdued aftermarket dampened that optimism. If a company with its profile couldn’t ignite a rally, others with more execution risk and lower margins would struggle to build book.

From the LP lens, the Arm IPO was a patience test. Many crossover funds and late-stage venture investors had waited years for a liquidity event, and got one that returned capital, not windfall. It reinforced a theme that played out across 2023: liquidity was possible, but outperformance was rare.

Birkenstock and Instacart: Contrasting Execution, Consumer Demand, and Valuation Resilience

Birkenstock and Instacart arrived on the public markets within weeks of each other, but their paths—and investor reception—couldn’t have been more different. One leaned into brand equity and European manufacturing heritage. The other brought marketplace economics, variable margins, and pandemic-era investor baggage. Both were highly anticipated. Neither got the market reaction they had hoped for.

Birkenstock’s IPO, priced at $46/share, raised nearly $1.5B and valued the company around $8.6B. Despite its consistent profitability and global consumer base, the stock fell over 10% on its debut. Investors questioned whether its premium positioning could withstand global consumer softness and margin compression. Footwear may be evergreen, but it’s still discretionary, and Birkenstock’s aspirations to become a luxury brand raised doubts in a deflationary environment.

Instacart (Maplebear Inc.), by contrast, entered the market with more complexity. It had a household name, strong gross order value metrics, and growing advertising revenue. But behind the numbers was a deeper concern: stickiness. Investors wanted to know whether post-pandemic demand would hold, or whether Instacart had become a utility service whose value-add would slowly commoditize. The IPO priced at $30/share but began to slide within days.

What these two listings reveal is how investors are recalibrating their lenses. Growth isn’t enough. Profitability isn’t enough. The question is whether the valuation matches the predictability of future cash flows—and whether the moat is real or presumed. Both companies came to market with strong narratives. Only one, arguably, had the financial profile to back it up.

To distill the divergence:

• Birkenstock had brand strength, profitability, and low capital intensity, but macro timing worked against it.
• Instacart had scale and ad monetization, but investor concerns around retention, margin durability, and category commoditization diluted demand.
• Both illustrated how investor discipline in 2023 meant passing on even quality names when the upside felt priced in.

In past cycles, these deals might have rallied on narrative alone. But not this time. The market is no longer buying the story unless the numbers already support it.

What 2023 IPOs Teach About Investor Discipline—and What That Means for PE & VC

Perhaps the clearest takeaway from 2023’s IPO class is this: the market is awake. The days of FOMO-fueled buying and 20x forward revenue multiples are firmly behind us. Public investors are underwriting like private equity managers—scrutinizing cohort metrics, unit economics, and long-term margin trends. For GPs and late-stage VCs, that shift carries real consequences.

For one, the IPO is no longer a reliable liquidity event on a 5–7 year timeline. Firms that underwrote Series C or D rounds expecting smooth exits are facing hard recalculations. Valuations that once leaned on comps like Snowflake or Airbnb now need to pencil against far tougher benchmarks. The disconnect between private and public pricing hasn’t closed—it’s been structurally redefined.

This has triggered a change in how PE and VC funds view exit pacing. Rather than rely on IPOs to create portfolio liquidity, many are shifting toward strategic exits, continuation vehicles, or secondary sales. Those who still aim for IPOs are coaching their portfolio companies with a different lens: clean balance sheets, stable gross margins, and proven capital efficiency.

More importantly, investor discipline in 2023 sent a signal upstream. Crossover investors, who once bid aggressively for allocation, now sit back until pricing clears. Hedge funds that dabbled in growth equity have pulled back. Even long-only institutions are setting tougher conditions for participation, demanding lower float volatility, more governance control, and less dual-class equity.

The IPO is still a viable exit, but only for companies that can meet a stricter threshold. It’s not just about growth potential or TAM anymore. It’s about durability, clarity of business model, and maturity of capital structure.

The 2023 IPO cycle didn’t bring back the euphoria. It brought back discipline. Deals like Arm, Birkenstock, and Instacart reminded the market that even well-known brands and scaled platforms must earn their valuations through predictability, not just narrative. For private equity and venture investors, that message is sobering but clear: exits will come, but only for companies prepared to meet the new public market standard. In this market, timing isn’t everything. What matters more is being truly ready when the window opens—and knowing whether the story you’re selling still resonates when the free money ends.