The spotlight this week is on hot IPOs. According to MarketWatch, it’s one of the busiest IPO weeks in years
For example, Klarna, the Swedish “Buy Now, Pay Later” (BNPL) giant, is launching a U.S. IPO at a $14 billion valuation, selling 34.3 million shares for $35–$37 apiece.
Then there’s Figure, a blockchain-powered home-equity lender targeting a $4.1 billion valuation, with shares priced at $18–$20.
Emerging investment platforms like Public.com are offering shares in these IPOs to investors like you. Perhaps you’ll take a look. After all, this does seem exciting.
But if you're really considering investing on these IPOs, here’s why this might be exactly the wrong moment — and why a smarter strategy lies elsewhere.
High Valuations and Underwhelming Fundamentals
Considering that Klarna continues to lose money, its $14 billion valuation is steep.
The company reported more than $50 million in Q2 losses, while the broader BNPL sector faces increasing competition, regulatory scrutiny, and margin pressure.
At least Figure is profitable. But its $4 billion valuation hinges on nascent regulatory clarity and the assumption of widespread adoption of its model. That makes its runway longer and its payoff potentially bigger — but riskier.
IPO Hype Often Overpowers Fundamentals
While a small minority of IPOs may deliver outsized gains, most IPOs tend to underperform over the short term and the long term.
- Bain & Company’s comprehensive study on IPOs from 2010–2014 highlighted that two-thirds of IPOs underperformed their benchmark indexes, with a median total shareholder return lag of 46 percentage points.
- A study from Barron’s / Janus Henderson on tech IPOs from 2010–2018 showed median underperformance of 19% in the first year, and average underperformance of 10% — attributed to “overvaluation” as well as downward pressure post-lockup.
- Dealogic data from 2025 showed that nearly two-thirds of tech IPOs traded below their offering price within the first week. After six months, just 53% of them were trading above their offering price.
Essentially, IPOs tend to surge on opening day — only to fall back as the euphoria fades and lock-up periods end or earnings disappoint. That’s why analysts advise patience: specifically, they advise waiting for lock-up expirations or first earnings before making any moves. This is especially true in sectors where investor excitement can outweigh real-world viability.
Platforms like Public.com are democratizing what was once an institutional-only game, and that’s exciting. But that doesn't make these high-risk plays any safer.
For Better Deals, Go Earlier
The smarter strategy? Invest in innovative companies early — before valuations blow sky-high.
Smaller raises and lower valuations can translate into outsized returns for disciplined investors.
To manage the risks of investing earlier, focus on a few main principles:
- The Team — Look for a balanced, well-educated team with multiple founders and domain experience. Statistically speaking, such a team can increase your odds of investment success.
- Price — To “buy low and sell high,” pay close attention to valuation.
- Diversification — To minimize risk and maximize your returns, aim to invest in two or three dozen startups over time.
To learn more about these three risk-management principles, keep reading our free articles.
These are the core principles we focus on at Crowdability. It’s not about chasing headline IPOs; it’s about how to build wealth from the ground up.
Final Take
Klarna and Figure are headline-makers this week, and platforms like Public.com make their IPOs feel like they’re within reach.
But these IPO valuations are lofty, fundamentals are murky, and history reminds us that early enthusiasm can be fleeting.
The real opportunity with startup investing isn’t in jumping on highly-priced IPOs.
It’s in finding high-potential companies when their valuations are still modest and the potential for vast growth is still in view. That’s where true wealth is created.
So here’s what we recommend:
Unless you’ll be using this week’s IPOs to sell your private shares, just walk away.
Save your money to invest in a private startup that could become the next Klarna or Figure.
To find early-stage tech companies raising capital now, check out our deals page »
Or take a look at the deal roundup email we send you every Monday morning.
Happy Investing,
Best Regards,
Founder
Crowdability.com
