Wednesday, however, with Steve Jobs just stepping down as CEO of the most valuable technology company on Earth, the planned IPOs of Jive Software, Brightcove, Eloqua and Genomatica took a backseat as the conversation topic du jour in tech circles.
That said, there’s some conversation-worthy material to be gleaned from the new filers about how startups and their backers are approaching the public markets. The four companies are targeting different customer bases — one is a an enterprise social software developer (Jive), one makes an online video platform (Brightcove), one is a marketing software provider (Eloqua) and one is a bio-engineering company (Genomatica). But the traits they have in common could tell us something about what entrepreneurs, VCs and investment bankers believe about the IPO market:
Here are the five conclusions we drew from the S-1 filings:
1. The IPO window has not closed.
Since the market turmoil began, at least nine companies have postponed their IPOs, including three that are venture-backed: Invensense, Wageworks and WhiteGlove Health. In addition, Renaissance Capital reports that nine companies have withdrawn their IPO plans completely this month.
Just last week, Len Blum, a managing director at Westwood Capital, told Reuters: “Whether or not companies can go public depends on whether this is temporary volatility or whether the economy is really in bad shape. I think it’s the latter. I think it’s going to be a tough IPO market.”
Tough or not, today’s filings show that the tech community still believes startups can go public. It costs roughly $1 million for a company to register for an IPO, so none of these companies would have filed if they didn’t seriously think they had a good shot of going public.
2. Wall Street still has an appetite for unprofitable companies.
We heard that message loud and clear with Groupon, but today’s filers bring the point home. All are unprofitable; some significantly so.
Jive is deepest in the red. It posted a net loss of $30.6 million in the first half of the year, more than double its loss in the year-ago period. A distant second, Brightcove’s net loss for the first half was $9.7 million, not counting an additional $2.8 million charge for dividends on redeemable preferred stock. Genomatica posted a $9 million loss in the first half, while Eloqua posted a loss of around $3.5 million.
3. $50M-$70M is the new $100M.
At one time, underwriters recommended that venture-backed companies looking to tap the public markets wait till they posted about around $100 million in annual revenue and were at or near profitability.
None of today’s filers took that advice. Jive’s revenue was $34 million in the first six months of the year, up from $19 million in the same period a year ago. Brightcove had revenue around $28 million in the first half, and $44 million in all of last year. Eloqua was around $32 million in the first half. Genomatica was by far the lowest — reporting revenue of under $2 million in the first half.
4. Brand-name VCs give you an edge.
This seems particularly true if one is not yet profitable. Certainly it’s helped Jive’s street cred that its largest backers are Sequoia Capital and Kleiner Perkins Caufield & Byers. The two firms have a history of doing well when working together — most famously, they were co-investors in Google.
Brightcove, meanwhile, counts Accel Partners and General Catalyst Partners as its largest investors, each owning about a quarter of the company. Eloqua is backed by JMI Equity, Bay Partners and Bessemer Venture Partners, while Genomatica’s investors include TPG Biotechnology, Mohr Davidow Ventures, VantagePoint Venture Partners, Alloy Ventures and Draper Fisher Jurvetson.
5. Big Banks are still your best bet (especially Morgan Stanley).
There’s been a lot of talk about boutique investment banks taking venture-backed companies public. But so far, the big Wall Street firms seem to be holding on to their edge.
Morgan Stanley is the lead or co-lead underwriter for three of the four companies: Brightcove, Genomatica and Jive. Eloqua, meanwhile, went with a different Morgan: J.P.
Fundraising? Then you don’t want to miss EMERGING MANAGER CONNECT in NYC on Jan. 24. This event is packed with 100+ LPs managing more than $45 billion devoted to emerging managers combined. Details are here: http://bit.ly/2ed5fcM
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