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Tableau closes Day 1 as a $2.9B public company, up 64 percent

Derrick Harris — Fri, 17 May 2013 22:59:24 +0000

Data analytics star Tableau had a successful initial public offering on Friday, closing the day up nearly 64 percent at $50.75 per share. That means the company brought in about $254 million (it sold 5 million shares, while stockholders sold 3.4 million) and has a market cap of $2.9 billion. Shares have remained relatively steady in after-hours trading, trending down only slightly.

“We’re thrilled,” Tableau co-founder and CEO Christian Chabot told me during a call after the market closed. One should hope so.

Chabot and his fellow co-founders stand to make a lot of money if today’s closing price holds up, as does its sole investor NEA. The firm put $15 million into Tableau since it launched in 2003, and has rode that sum to profitability and more than $127 million in annual revenue.

Here’s a quick chart (made using Tableau Public) showing who owns how many share and what they’re potentially worth.

The company didn’t really need more capital to operate, Chabot said, but one of the primary drivers was to raise awareness of the company. It has about 12,000 customers, he said, but there are millions more possible users. As part of attracting them, the company is going to expand globally and is working to improve its reach across mobile devices, the cloud and the Mac operating system.

“I don’t believe in the this whole ‘or’ philosophy with computers,” Chabot said. “It’s ‘and’” — meaning people will use desktops and tablets and smartphones.

More prominence and more users singing its praises might also dispel the notion that Tableau is just about visualization. It has some fairly advanced features under the covers (as a commenter to my earlier post about the company’s influence pointed out), even if they’re hidden by the relatively simple user experience.

“Tableau is not a visualization company, per se, it’s really an analytics company,” Chabot said.

However, if the company really wants to expand its reach to everyone one who wants to gain knowledge from data — something Chabot calls a “timeless human need” — it might actually need to get simpler. More marketing can let potential business users know about new features like forecasting and data-extraction, but it won’t make a dentist is Des Moines better at formatting his data.

After raising $254 million in its IPO, though, Tableau is in a good place to do whatever it has to.

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Marketing automation boom continues with Marketo’s $75 million IPO filing

Barb Darrow — Wed, 03 Apr 2013 13:00:18 +0000

We all know based on M&A activity that marketing automation is big. Now, Marketo has filed for an initial public offering valued at $75 million, according to an SEC filing.

The news broke just hours after data visualization fan favorite Tableau filed for a $150 million IPO of its own. The public offerings are seen as validation that companies that build business-to-business software are hot right now.

In November, San Mateo, Calif.-based Marketo raised $50 million in venture funding from Battery Ventures, bringing total funding to date for the 7-year-old company. And category leader Hubspot raked in $35 million in mezzanine funding to bring its total trove to $100 million.

In December, Oracle dropped $871 million to buy Eloqua; a month later InfusionSoft, which focuses on marketing automation for smaller companies, netted $54 million in new funding.

Marketing automation vendors aim to help customers find and qualify sales leads — gleaning attractive prospects from sources including online ads but also from Facebook, Twitter and other sources. The goal is to prequalify these prospects and convert them into actual sales.

Many companies now use an inefficient hodgepodge of processes and products for this purpose. Given that chief marketing officers are now seen as having huge influence on IT purchases, vendors are chasing that constituency.

Marketo’s ticker symbol will be “MKTO” and shares will trade on NASDAQ. VentureBeat has more on the offering.

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Our innovation economy won’t grow until we fix the broken IPO market

Mona DeFrawi, Guest Contributor — Sat, 02 Mar 2013 18:30:50 +0000

It’s been 12 years since the internet bubble burst, and in the ensuing fallout, it has become apparent that the IPO market has been fundamentally damaged. Thanks to a lack of national confidence and lingering fears and confusion about the potential risks of IPOs, far too many good companies – ones that could supply much needed jobs to the U.S. economy – are unnecessarily paying the price. While addressing the fouled IPO market certainly isn’t a cure-all for our ailing economy, there’s no doubt that some of America’s missing growth and lost jobs over the past decade are certainly to be found locked away in this hidden treasure chest.

Breaking the IPO market

We can look back now and see that permanent structural changes that were prompted as a result of the dot-bomb crisis– many initially subtle and gradual – shifted our markets so that we frogs didn’t realize that our cold-water world was slowly coming to a boil. And we got cooked.

In fact, a host of factors have contributed to the process. Electronic trading, decimalization, consolidation of the ‘Four Horsemen’ boutique banks into the bulge bracket banks, and the dominance of hedge funds — all these factors helped transform our investment focused public markets into a high-velocity, high-volume trading world. And that has choked the ability of young companies to get the long-term growth support they need to create more jobs for the rest of us.

New regulations to control the underlying corrupt financial practices that helped create and burst the bubble also hindered the growth of legitimate companies with IPO potential. Sarbanes Oxley and analyst regulations added costs while removing critical support. The result has been that the number of years to IPO has been shifted from an average of under five years, to over 10 today. These structural changes in the financial markets have stunted capital formation and in essence broken the IPO process.

Accepting and promoting our new economy

President Obama stated in his recent State of the Union Address that America’s future will come from rebuilding a strong middle class. However, the belief that the solution to moving forward is to resort to the old manufacturing economy is wrong. If we look back over the past 20 years to where the greatest number of jobs have come from, the answer is new-economy companies like Apple, Google, Amazon and Starbucks, which each employ about 300,000 people.

We are now in an “innovation economy” growth phase cycle, and because it is specifically dependent on IPOs – with 92 percent of job growth for companies occurring post-IPO– one can easily connect the lack of growth and jobs over the past decade right back to when IPOs became blocked.

To deliver middle class jobs in the U.S., Mr. Obama needs to focus on creating more tech jobs – which, according to Moretti’s multiplier of five, spawn three middle-class jobs and two professional jobs each.

Preparing CEOs for today’s market realities

What is most wrong with the system is that it is skewed to incentivize short-term focus. Today’s high frequency trading benefits from volatility and in effect creates pump-and-dump scenarios. For IPOs, that translates to often wild price fluctuations, with from 300 to 500 percent of IPO allocations usually trading within the first 48 hours of a company’s offering.

The solution is for company CEOs to take back the reins and factor in aftermarket trading. Managing your shareholder base composition is a basic investor relations function that companies need to begin developing years prior to IPO, including inviting key shareholders into late-stage private rounds. A good rule of thumb is to aim for 60 to 70percent long-term holding base for stability, and 30 to 40 percent short-term holders for liquidity. This yin-yang balance will support a perception that matches reality (fundamental performance).

Without a core of growing companies (that are appropriately valued), the economy will simply keep generating more uncertainty and distrust, further limiting good, young companies’ ability to hire and grow.

Mona DeFrawi is founder and CEO of Equidity, a firm that matches investors with private companies. Follow her on Twitter @MonaDeFrawi.

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Fewer IPOs in 2012, but venture investors enjoyed bigger payoffs [charts]

Rani Molla — Wed, 02 Jan 2013 17:55:37 +0000

Both the number of venture-backed initial public offerings (IPOs) and the number of mergers and acquisitions (M&As) decreased in 2012, but their average values increased, according to a report released today by Thompson Reuters.

The Exit Poll report, conducted in conjunction with the National Venture Capital Association (NVCA), makes clear something we’ve known for a while: IPOs aren’t as popular as they used to be. The average offer amount for IPOs has gone up 225 percent since 2007; the average offer amount for M&As has gone up 16 percent in that same time. Both have seen fewer deals in 2012 than they did five years ago.

According to the report, the information technology sector led with the highest total deal size.

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Who’s getting ready for an IPO? Chances are, it’s an enterprise company

Eliza Kern — Thu, 06 Dec 2012 05:01:06 +0000

After recent IPOs like Groupon, Zynga and Facebook, perhaps it’s not surprising that the next generation of technology IPOs is likely to come from enterprise-oriented companies. A new report from the analysts at CB Insights breaks down those companies and their investors, noting that not all of these companies are necessarily headed toward an IPO, but pointing out that those companies do demonstrate where the big money in technology might lie.

The report, which can be found in its entirety online here, looked at 472 private technology companies estimated to be worth $100 million or more. Here are a couple of interesting points that caught my eye:

Big companies still cost big money: It might be fairly cheap to build a software app and do a startup (as the Lean Startup approach advocates), but growing that business to larger valuations and a potential IPO still costs money. Of the companies the report evaluated, the median funding per company is $75.8 million, with an average of $84.7 million.
Selling to businesses over consumers pays: 80 percent of the companies in the study target their services at other businesses, as compared to strictly consumer businesses.
Mobile and telecom come in behind internet for top sectors: Internet companies dominate the list, making up 229 of the 472 total, but mobile and telecom companies, like those focused on wireless connectivity and broadband services, are doing well too, with 76 companies represented.
New York and Massachusetts vie for second place: California still tops the list of where the companies come from, but the two northeast states are essentially tied for second.
It takes time to grow a company: Not surprisingly, the companies topping the list weren’t built overnight. One-third of the companies raised their first financing more than seven years ago.

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Report: SolarCity IPO before the end of the year?

Katie Fehrenbacher — Sat, 24 Nov 2012 17:38:51 +0000

Solar installer SolarCity filed for a potentially $201 million IPO back in April and the solar industry — and cleantech watchers — have been waiting to see when the startup would debut. Well, according to a report in Reuters this week, SolarCity plans to go public before the end of the year, and the move was delayed a bit by super storm Sandy.

Based in San Mateo, south of San Francisco, and founded in 2006, SolarCity wants to be listed on the NASDAQ under the symbol “SCTY.” The company recorded $59.55 million in revenue and $73.71 million in net losses in 2011, compared with $32.43 million in revenue and $47.07 million in net losses in 2010. For the first six months of this year, the company posted $71.42 million in revenue and $48.91 million in net losses.

If SolarCity has a successful IPO it could be an important bellweather for venture-backed solar and next generation energy technology exits. There have been very few in 2012 — for example, solar project developer BrightSource ditched its planned IPO because it wasn’t getting the valuation it wanted.

The company raised $200 million in venture funding, and its investors include Draper Fisher Jurvetson, DBL Investors, Generation Investment Management and Tesla Motors’ CEO Elon Musk. This would be the second large IPO for Musk’s investments, following Tesla.

SolarCity was one of the early crop of solar installer startups which used financing options, such as leases and power purchase agreements, to attract customers. With these types of financing arrangements, home or business owners don’t have to pay the expensive upfront cost of buying and installing solar panels, and SolarCity covers that cost. The homeowner, instead, pays a monthly fee for the energy. SolarCity has raised hundreds of millions of dollars from banks such as U.S. Bancorp and from corporate investors such as Google to pay for these upfront costs.

SolarCity has also moved aggressively into energy efficiency audits, and plans to expand that business going forward. Here’s 5 things you should know about SolarCity’s IPO (and they aren’t all good).

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Wi-Fi networker Ruckus raises $126 million in IPO

Kevin Fitchard — Fri, 16 Nov 2012 22:52:03 +0000

Wireless networking startup Ruckus Wireless graduated to public company status on Friday, appearing on the New York Stock Exchange under the ticker RKUS after clearing $126 million in an IPO. Ruckus sold 8.4 million shares at $15 a piece, valuing the company at $1.2 billion, but when trading commenced this morning the stock price fell steadily throughout the day closing at $12.30.

Based in Sunnyvale, Calif., Ruckus makes both enterprise and carrier-grade Wi-Fi gear, which mobile operators use to augment their 3G and 4G mobile broadband networks. Wi-Fi has been a hot space in wireless in the last two years, as carriers look for ways to add cheap and plentiful capacity. Ruckus and its biggest competitor BelAir Networks both benefited from the trend, landing huge carrier deals to build massive outdoor Wi-Fi systems. BelAir got acquired by networking giant Ericsson, but Ruckus opted to remain independent, partnering with Ericsson’s competitors.

While the company’s initial investors sold off 1.4 million shares, its largest venture capital investor Sequoia Capital stayed all in and now owns 24 percent of the public company, BusinessWeek reported. The company’s co-founders Bill Kish and Victor Shtrom are remaining with Ruckus, serving as CTO and chief wireless architect respectively. The CEO role remains in the hands of Selina Lo, a veteran of another startup that went public Alteon Websystems.

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Next digital health IPO: Practice Fusion, Castlight or ZocDoc?

Ki Mae Heussner — Mon, 12 Nov 2012 19:50:14 +0000

In the last year, several health tech startups have gained momentum, but according to a survey of digital health entrepreneurs, Practice Fusion, Castlight and ZocDoc are the closest to making their public debut.

The survey of 100 entrepreneurs was conducted Conducted by Interwest Partners, the venture capital firm behind Epocrates, Doximity and other health tech and life sciences companies. When asked which digital health company will be the next to go public, about a quarter (26 percent) of respondents named electronic medical records company Practice Fusion, which has raised $70 million in the past few years. Twenty-one percent of respondents identified Castlight Health, which has raised a whopping $160 million for its price transparency and online comparison tools, and 19 percent chose online appointment booking service ZocDoc, which has raised $95 million.

Not surprisingly, the CEOs of those companies have been mostly quiet about their long-term plans. In raising the company’s $100 million Series D round, though, Castlight CEO and cofounder Giovanni Colella reportedly indicated that an IPO was up next for the company.

The survey also asked entrepreneurs which company they wished they had founded (besides their own). Google took the top spot on that list, but it was followed by ZocDoc and then Castlight, electronic heatlth records company Epic and medical software firm Airstrip.

Much like those in the tech world at large, digital health entrepreneurs appear to have tired of the big buzzwords, with about a quarter of respondents each indicating that “gamification of healthcare” and “big data/predictive analytics” are the most overused phrases in health tech.

As for the biggest challenges to innovation, the respondents said that reimbursement was their top concern (27 percent), followed by government (19 percent). Interestingly, even though it ranked highly as a company entrepreneurs wished they had founded, Epic (along with electronic health records company Cerner) was listed as one of the top challenges to innovation by 14 percent of respondents. Writing about the survey, Interwest’s Executive-in-Residence Michelle Synder wondered if that finding stemmed from recent research showing that while companies like Epic and Cerner dominate the health information exchange (HIE) market, health providers are dissatisfied with their ability to move data between systems.

Synder wrote:

Perhaps respondents who wish they had founded Epic had seen the recent KLAS data showing the company continuing to dominate the market? Or they have firsthand experience seeing the difficulties in trying to integrate into a closed system? Unfortunately for many of my clinician friends, Epic seems to be one of the few B2B companies that has found a way to succeed in spite of not providing a good “C” experience to the end user.

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More startups let employees sell shares on SecondMarket amid IPO uncertainty

Ki Mae Heussner — Fri, 09 Nov 2012 18:38:20 +0000

Over the past few years on SecondMarket, the New York-based platform for trading shares in privately-held companies, the majority of sellers have been former employees of startups. But in the last couple of quarters, as the IPO market cooled in the wake of Facebook’s disappointing debut and the poor performance of other recently-public tech companies, SecondMarket said current employees have become the new dominant class of sellers.

As more startups put their IPO plans on ice and eye a longer path to the public markets, they’re using SecondMarket liquidity programs, which let employees cash out pre-IPO, as a way to rally the troops, the company said.

“Companies don’t want to go public,” said Aishwarya Iyer, public affairs manager for SecondMarket. “[They] realize that their employees will need liquidity at some point, and are working with us to create employee liquidity programs as a morale-booster.”

According to SecondMarket’s third quarter report released Friday, 75.5 percent of the sellers were current employees, which is up from about 60 percent last quarter and just 17 percent in the third quarter of last year. Former employees comprised just 18 percent of the sellers in the third quarter of this year, down from 65 percent in the same quarter last year. Traditionally, many private companies have banned current employees from selling shares or limited the amount they can sell.

Workday’s big IPO last month could give startups more hope about a nearer-term public debut, but it will be interesting to see if companies continue to use liquidity programs as a way to keep up internal morale.

In the third quarter, SecondMarket said that the companies whose shares were traded on its platform had a median market cap of $538 million and that the median funding amount raised was $146 million. It also said that while consumer web and social media companies have dominated in other quarters, the consumer electronics industry received the most transactions this quarter, followed by e-commerce and financial services.

In its report, the company also listed a few of the startups that attracted the most attention in the third quarter.

Cloud networking provider Meraki led the list of “rising stars” (with a 309 percent increase in people who “watched” it online), followed by Codecademy, Kiip, Good Technology and Sonos. Online education startup Coursera took the top spot on the list of “newbies,” followed by Addepar, RocketFuel, Fancy and Coupa.

Image by Denis Vrublevski via Shutterstock.

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Shares of cloud-HR company Workday soar on first day of public trading

Barb Darrow — Fri, 12 Oct 2012 16:41:18 +0000

The highly anticipated debut of Workday did not disappoint. Shares of the enterprise software provider opened at $48.05 Friday — well above the $28 per share opening price set earlier in the week. At the time of this post, the company, had sold 22.75 million shares raising $637 million.

Workday provides human resources Software as a Service (SaaS) and is the brainchild of PeopleSoft founder Dave Duffield and Aneel Bhusri, another respected former PeopleSoft executive. The two decided to take what PeopleSoft did best — tasks like handling employee records, reviews, payroll etc. — and move the whole kit-and-kaboodle to Software as a Service a la Salesforce.com. The company launched in 2005 about a year after Oracle completed its highly contentious battle to acquire PeopleSoft.

By most accounts Workday has done very well winning customers like Brown University, Guardian Life, and Morgan Stanley. And it replaced Oracle and SAP applications in accounts like Flextronics International, Kimberly-Clark, Sun Life Financial Inc. and Lenovo, according to Bloomberg Businessweek. Unlike old-line enterprise software rivals like Oracle and SAP, Workday does not have to worry about its SaaS offerings cannibalizing the sales of pricey on-premises software.

All of that customer traction has been reflected in the company’s valuation. Documents filed with the SEC on October 1, pegged the company’s valuation at $3.6 billion, but when the company re-set the expected opening day share price, raising it from the $22-to-$24 per share range to $28 per share, that valuation soared to $4.5 billion.

Stock chart courtesy of Bloomberg.com

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