Recent IPOs Earn Billions for VC Firms, Reminding Investors that Big Fish Start Small—Consideration for QSBS


Two recent IPOs earned venture capitalists billions through their stock market debut: data platform, Confluent, and health tech company, Doximity. Confluent raised an impressive $828 million and Doximity a not-so-paltry $606 million. Behind the scenes, four venture capital firms were quietly named the winners of the day. 

Which Venture Capital Firms Backed Confluent?

Confluent, currently valued at $11.4 billion, is backed by Index Ventures. As part of their approach to identifying up-and-coming technologies, the tech investment firm sends out a survey to the 400 companies in its portfolio every year. Back in 2015, Index became aware of a product called Apache Kafka. The product is a brainchild of the professional networking giant—LinkedIn. Index soon became Series B investors in Confluent, and today that investment gives them a stake worth over $1.3 billion. 

That profit still trails the top winner of the week: Benchmark, who was part of Confluent’s Series A funding, has the largest portion of shares, now valued at $1.6 billion.

Which Venture Capital Firms Backed Doximity?

Doximity, a professional network for doctors that was a niche name when they secured their first round of investment from Emergence Capital and InterWest. At the time, the company had no paying customers, and the VCs were taking a gamble that the concept had potential for growth.

Today, Doximity is one of the rare companies that is already turning a profit as they launch their IPO. The company netted $50.2 million last year through allowing pharmaceutical manufacturers to run ads for their drugs and treatments and giving medical recruiters a database of prospective job candidates.

Doximity’s shares debuted at more than 58% above their IPO listing and rose a whopping 104% before closing time. The medical network’s two major investors, Emergence Capital and InterWest, now own shares worth $1.3 billion and $1.1 billion respectively. 

Recent Examples of QSBS Companies

During this year of near-record highs on U.S. stock exchanges, investors are scanning the horizon for the next big opportunity. Some like, Confluent, might be new enterprises started by established companies. Others, like Doximity, may be a relatively unknown name at the start with great potential for growth. 

Another category that can be a surprising payoff for stockholders is qualified small business stock (QSBS). While the nature of these companies is that they’re small at the start, future dividends can make the initial investment more than worthwhile. Additionally, QSBS has the benefit of a significant tax break—federal law currently allows an exclusion of up to 100% on capital gains tax if the stock meets their requirements

To learn more about QSBS guidelines and understand the available benefits, visit QSBS Expert’s Getting Started page.

This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.

About QSBS Expert

QSBS Expert was founded by a group of entrepreneurs, investors, accountants and lawyers who came together when trying to navigate a QSBS situation of their own. We quickly realized that the regulations left a lot of open questions and the publicly available information was confusing to sift through…so we thought that others may also benefit from having a “go to” resource for all things QSBS.