Contact: Brenon Daly
Call it a startup shutout. Not a single tech company went public in the just-completed first quarter, marking the first time since the recent recession that we haven’t seen a tech IPO in a quarter. The lack of tech offerings so far this year stands out even more when we consider the dozens of startups in recent years that have indicated – either directly or indirectly – that they are of a size and mind to go public.
Consider the plight of one of the two tech vendors that recently revealed its IPO paperwork, Nutanix. The fast-growing provider of hyperconverged infrastructure officially filed its IPO prospectus, which was supported by no fewer than a dozen underwriting banks, in late December and fully planned to debut in Q1. And yet, despite all of the time, effort and expense in putting together the paperwork to go public, Nutanix remains private. The company hasn’t even updated its original filing from three months ago. (For comparison, SecureWorks filed its paperwork shortly before Nutanix and rather belatedly amended its filing in March, and is expected to launch its offering in April.)
Meanwhile, the other exit available to startups – an outright sale – isn’t looking like the richly rewarding process it once was. Sure, Jasper Technologies enjoyed a 10-digit exit to Cisco in early February. But we would point out that no other VC-backed tech startup has sold for more than $400m so far this year. Rather than Jasper’s exit, we might highlight a pair of other transactions involving IPO wannabes as far more representative of the current environment.
Take the case of Yodle. The digital marketing firm had been on file to go public since 2014, but hadn’t updated its original filing. Instead of dusting off its prospectus, it accepted a relatively low bid of $342m, or 1.6x sales, from hosting provider Web.com in February. Or even consider the sale of iSIGHT Partners to FireEye in February for $200m upfront plus an addition $75m earnout. According to our understanding, the $200m upfront is only slightly more than the company’s valuation in its funding a year ago. Around the time of the funding, iSIGHT had been indicating that it planned to debut either in 2016 or 2017.
451 Research subscribers can view our analysis of the recent IPO and M&A activity and our outlook for the rest of 2016 in our Q1 report, which will be on our website later today and in tomorrow’s 451 Market Insight.
Projected ‘competition’ from IPOs for target companies
Source: 451 Research Tech Corporate Development Outlook Survey
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