If you’ve been looking for IPOs to watch out for in 2023, you’ve likely come up empty-handed. According to Renaissance Capital, just 29 companies have gone public in the United States so far this year, raising $2.3 billion in proceeds. That’s 61% and 10.5% higher than in 2022, respectively. But it still pales in comparison to the record year in 2021, when 397 IPOs took place, raising $142.4 billion in proceeds. 

Things have been bleak worldwide, as well. According to an EY report, 299 companies went public in the first quarter, 8% lower than in Q1 2022. But that’s not the worst part. The report states that the $21.5 billion raised from the IPOs is 61% lower than a year ago. 

Part of the problem has to do with investors’ aversion to risk amid a bear market, rising interest rates and a potential recession. But things may be starting to look up. The Nasdaq 100 finished Q1 with its second-best quarter in a decade, perhaps signaling the risk-on trade is back.

If this is the case, it’s possible we could see the pace of IPOs pick up. Here are three IPOs to watch out for in 2023.   

Nextracker (NXT)

Of the three names on my list of IPOs to watch, Nextracker (NASDAQ:NXT) is the only one that’s gone public. The manufacturer of solar trackers and related software debuted in early February at $24 a share, above its pre-IPO pricing of $20 to $23. 

It raised $638 million in gross proceeds. In addition, underwriters exercised their option to buy 3.99 million shares at $24 for further gross proceeds of $95.8 million, for a total of nearly $734 million.  

The company’s latest quarterly results were healthy. Additionally, revenue for the first nine months of fiscal 2023 was $1.38 billion, 36% higher than a year earlier. Further down the income statement, operating income was $127.9 million for the nine-month period, 119% higher than in 2022.   

Some of the highlights of the company’s prospectus include $1.5 billion in fiscal 2022 revenue and more than 70 gigawatts (GW) of trackers shipped through September 2022 to more than 200 customers.

Nextracker was spun off from its parent, Flex (NASDAQ:FLEX). As a result of the IPO, Flex owns nearly 64% of Nextracker. Private equity firm TPG (NASDAQ:TPG) owns an additional 17%, with the public holding 19%. 

The global solar tracker market is expected to grow to $71 billion annually by 2030. This makes Nextracker a recent IPO to watch in 2023.

Navan

The brand formerly known as TripActions leads many lists of IPOs to watch to watch in 2023. The provider of corporate travel and management expense software rebranded in February. 

“Our new name was chosen to communicate the company’s offerings in a simple, elegant, and scalable way,” stated Chief Executive Officer (CEO) and co-founder Ariel Cohen. “The new name is not just focused on travel — rather, it is intentionally broad, acting as a platform to service clients holistically through relentless innovation.” 

While Cohen’s language is nothing more than corporate speak, one point in his blog post announcing the new name resonates: “[We] continue to challenge the market to build software that improves the lives of people fundamentally, while saving companies time and money.”

Saving people time and money is a logical reason to start and run a business. That never gets old. 

As for the business itself, Navan has more than 9,000 customers, and most have been customers for years, according to Cohen. He also noted the company is adding about 300 new customers per month. So it’s definitely in growth mode, which is a prerequisite for going public. 

Cohen estimates the global business travel market is worth approximately $1.5 trillion annually. Of that, $250 billion is covered by travel management companies such as American Express (NYSE:AXP) and Carlson Wagonlit. That leaves $750 billion for companies such as Navan. That’s not chump change. 

In October 2022, Navan secured $304 million in Series G funding. At the time, the funding valued Navan at $9.2 billion. That’s probably a little lower today, but still well into the billions. With Navan expected to go public later this year, put it on your list of IPOs to watch.

ServiceTitan

The backstory to the founding of ServiceTitan is an interesting one. Ara Mahdessian and Vahe Kuzoyan met on a ski trip in late 2004. Early the following year, the software engineers built a software toolkit to help their two fathers, who just happened to be in the contracting business. Two years later, in June 2007, they launched ServiceTitan. A few milestones later, it generated $460 million in 2022 revenue. 

However, not all is rosy at the software company. According to The Information, it burned through $170 million in cash in 2022, or 37% of its annual revenue, indicating that it’s not profitable. This will make going public in the current environment very difficult. 

The Information also reported that the company has been struggling to get funding at an appropriate cost. In 2021, it raised funds from venture capital firms at a $9.5 billion valuation. The discussions late last year centered around $600 million in equity funding valuing the company at $7.6 billion.   

I know a little about construction software because my wife operates a construction business. While ServiceTitan might have nearly 12,000 trade customers, significant competition exists. Everyone from Monday.com (NASDAQ:MNDY) to Salesforce (NYSE:CRM) to Procore (NYSE:PCOR) to Trimble (NASDAQ:TRMB) has something to offer contractor businesses. Unfortunately, knowing who’s full of it and who’s the real deal isn’t easy.

For ServiceTitan to profitably scale its business, it will have to spend a ton of money to get to the top of the mountain. From my vantage point, a cash burn of $170 million is only the beginning.

Of the two companies that haven’t gone public, I would say that Navan is closer to doing an IPO. We’ll find out soon enough. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.