- A recent algorithmic analysis by Pitchbook indicates that Ripple has a staggering 98% likelihood of going public through an Initial Public Offering (IPO).
- The probability assessment took into account various key factors like fundraising rounds, patents, acquisitions, and more, but does not provide a specific time frame for an IPO.
The Mechanics of Ripple’s Near-Certain IPO Path
In the investment world, predicting the future is a precarious task, often fraught with uncertainty. However, when Wall Street veteran Linda Jones tweeted about Ripple’s potential for an Initial Public Offering (IPO), the data she cited was compelling enough to make anyone pause. Jones leaned on findings from Pitchbook, a significant player in the realm of venture capital analytics.
Pitchbook has an algorithm that analyzed 64,000 past successful exits of private companies by IPO or merger & acquisition (M&A) since 2018. They analyzed data such as frequency and size of fundraising rounds, number of patents, number of employees, number of acquisitions made by… pic.twitter.com/DhYtlsC9G7
— Linda P. Jones (@LindaPJones) August 30, 2023
The Algorithmic Alchemy Behind the 98% Prediction
The methodology employed by Pitchbook’s algorithm is nothing short of rigorous. It examines a multitude of data points that encompass not only the financial metrics but also the strategic choices and market position of private companies. Specifically, the algorithm analyzes historical data from the past five years, covering 64,000 successful exits through either IPOs or mergers and acquisitions (M&As).
Among the factors scrutinized are the frequency and scale of fundraising rounds, the accumulation of patents, the scope and scale of acquisitions undertaken, and the size of the workforce. Additionally, the algorithm weighs the total addressable market, the pace of revenue growth, the engagement of active investors, and the overall financial maturity of the organizations in question.
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After this comprehensive evaluation, each company is assigned an “Exit Success Probability.” In the case of Ripple, a blockchain payments firm, this number was a remarkable 98%, an indicator that is hard to overlook.
Linda Jones also elaborated that the Pitchbook algorithm does not prognosticate the timing of an IPO; rather, it calculates the probability of such a significant event occurring. Interestingly, Jones shared an ancillary finding that companies positioned in the top 10% of Pitchbook’s rankings in 2018 were 3.8 times more likely to have a successful exit compared to those in the lower 90%.
Market Timing and Regulatory Milestones
The speculation about Ripple’s IPO has further intensified given its recent regulatory successes. Analysts speculate that the climate is becoming increasingly conducive for Ripple to make its public market debut, especially as it follows a triumphant legal year. While no specific timeframe has been set, industry pundits are starting to view a Ripple IPO as not just possible, but highly probable within a year of its regulatory victories.
Hence, as discussions around Ripple’s IPO gain momentum, the Pitchbook algorithm serves as a powerful backdrop, providing a numerical basis for optimism amid market unpredictability.
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