Striking while the iron’s hot, SugarCRM is weighing an IPO for next year. The news comes just weeks after Workday, another enterprise software vendor, executed a hugely successful public offering. That’s an indication that the bloom is back on the IPO rose for companies offering their business software as a service. That Software-as-a-Service (SaaS) model was pioneered by Salesforce.com, a much larger rival to SugarCRM.
SugarCRM CEO Larry Augustin said the company’s goal is to be a public company and “there’s a chance we can get there in 2013,” according to Bloomberg.com.
Despite signs that enterprise SaaS is the place to be — Workday’ share blew past expectations on its October 12 launch — Augustin signaled the need to proceed with caution. He’s been burnt before.
As Bloomberg pointed out, Augustin was CEO of VA Linux, another open-source oriented company, which went public in 1999, and quickly saw its market cap spike at $15 billion based on sales of $12 million to $15 million, and then crater in the dot.com bust. The company unwound over the years becoming SourceForge, then GeekNet. What was left was acquired in September by Dice Holdings.
As Augustin told Bloomberg West TV: “There are lots of lessons from that. You saw that valuation come down very quickly.”
SugarCRM claims customers including Coca Cola Enterprise and ThyssenKrupp System Engineering, the State of Oregon and Men’s Wearhouse (which Salesforce.com also claims as a customer).