According to the news in the morning of March 6, Beijing time, data show that recently listed technology companies in the United States burned more than $12 billion (about 82.92 billion yuan) in cash in 2022. After the collapse in share prices, dozens of companies are now faced with the dilemma of how to raise more capital.

According to the news in the morning of March 6, Beijing time, data show that recently listed technology companies in the United States burned more than $12 billion (about 82.92 billion yuan) in cash in 2022. After the collapse in share prices, dozens of companies are now faced with the dilemma of how to raise more capital.

However, as the profits from the deal boom run out, many companies face difficult choices, either to raise capital at higher costs, to slash operating costs, or to be acquired by private equity firms or larger competitors.

Adam Fleischer, capital markets partner at Carrie, said: "these companies have benefited from very high valuations, but unless they really rise against the trend, share prices must have fallen sharply by now. Before things get better, they must find the most suitable choice. "

Adam Fleischer, capital markets partner at Carrie, said: "these companies have benefited from very high valuations, but unless they really rise against the trend, share prices must have fallen sharply by now. Before things get better, they must find the most suitable choice. "

Of the 91 newly listed technology companies that have reported results so far this year, only 17 have made a net profit, compared with a total cash consumption of $12 billion last year. Were it not for Airbnb's excellent performance, with cash flow exceeding $2 billion, that figure would have been even worse. On average, these money-burning companies spent 37 per cent of IPO revenue a year in 2022.

In addition, about half of the 91 companies are operating at a loss. This means that these companies cannot save money simply by cutting investment. At the same time, their shares have fallen by an average of 35 per cent since they went public. This means that if the company sells more shares, existing investors will have to pay a high price and the shares will be diluted.

Fleischer said that "if they feel very desperate, some people may sell shares cheaply", but so far, "the action in this area is not very active."

The decline in valuations is partly due to the rise in dollar interest rates, which reduces the relative value of investors' future earnings. At the same time, the fall in share prices also reflects concerns about the short-term outlook, which could add to the challenge of profitability.

Ted Mortonson, technology analyst at Baird, the US brokerage, said: "order stocks are good in 2023, but the question is how to get new orders to replenish them. This is a common problem and it will be more difficult in the first half of the year. "

Ted Mortonson, technology analyst at Baird, the US brokerage, said: "order stocks are good in 2023, but the question is how to get new orders to replenish them. This is a common problem and it will be more difficult in the first half of the year. "

Some companies believe that the money raised in good times is enough to help them weather the current storm. Carmaker Rivian burned $6.4 billion in 2022, but Claire Mcdonough, the company's chief financial officer, said last week that she was "confident" that the company had enough cash to last until the end of 2025.

This pressure has led to an increase in mergers and acquisitions. Experts expect M & An activity to accelerate this year.

"I'm sure you'll see a lot of companies pull out of the public market," said Andrea Schulz, a partner in research technology companies with the accounting firm. Traditionally, many companies operate longer in the private sector, and perhaps they now need to stay in the private sector for longer. "

Baird's Mortenson says Thoma Bravo's latest deal provides a blueprint for other private equity firms to emulate. Thoma Bravo reached an agreement last year to buy ForgeRock, an information security company, which was only 12 months away from IPO. Thoma Bravo also acquired two other companies, Ping Identity and SailPoint, which went public in 2019 and 2017, respectively.

"Private equity firms know that a lot of these companies have to scale up, so they are buying different puzzles and building platforms like this," Mortenson said. They can buy when the price is low. In a few years, you will see the merged entity re-listed. "

However, this route may also be accompanied by complex problems that need to be solved. The US Department of Justice is currently investigating the ForgeRock transaction. Mr Schultz says antitrust pressure could change the behaviour of some large technology companies that have been willing to buy other businesses cheaply in the past.

However, this route may also be accompanied by complex problems that need to be solved. The US Department of Justice is currently investigating the ForgeRock transaction. Mr Schultz says antitrust pressure could change the behaviour of some large technology companies that have been willing to buy other businesses cheaply in the past.

Michael Youngworth, a convertible bond analyst at Bank of America, said the convertible bond market was now dominated by larger companies in the "traditional economy". "compared with what we saw in 2021, the right technology company can still strike a deal with less bubble terms, but the conversion premium must be much lower and the interest rate must be much higher."

Some companies are looking for a more direct but more expensive way of financing: loans. Greg Becker, chief executive of Silicon Valley Bank, told analysts earlier this year that lending to the bank by technology companies had increased significantly, while in the past these companies preferred to raise money by selling shares.

For some companies, these options may not be appropriate. Schultz said that the rush to go public at a high valuation has led to the public market spotlight on problems that companies previously needed to solve in unlisted situations. "the public will now see problems that only venture capital firms can see in the past, because these companies have to prove on the public stage whether their products are competitive or have a market. The result will be mixed. Some of these companies may cease to exist, or the team may be included through mergers and acquisitions. "