Covering YC Demo Day yesterday was good fun, but I missed a few items while watching several hundred startup pitches. A few years ago, these stories might have been the biggest news of the week.
But with the venture capital market redlining its engines while public markets remain sympathetic to growing, unprofitable companies, there’s lots going on. So, as a follow-up to our first late-stage roundup that we published yesterday morning, here’s another.
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This time we’re discussing IPO news from DigitalOcean (context), Kaltura (context), Robinhood (context) and Zymergen, and big rounds for Lattice and goPuff. That’s a lot to chew on, but I’ll be brief and to the point.
We’ll commence with the IPO news and then pivot into the late-stage rounds, just in case more drops this morning while we’re typing our way through yesterday’s news. Let’s go!
IPO updates
Today’s most pressing news is that DigitalOcean, a provider of cloud services to small businesses, priced its IPO at $47 per share last night. That was right at the top of its public-offering price range of $44 to $47. Before counting shares reserved for its underwriters, DigitalOcean is worth just under $5 billion.
And the company raised a gross $775.5 million in the offering, giving DigitalOcean a massive war chest to pursue its vision. As the company has proved increasingly unprofitable on a GAAP basis in recent years, the extra cash isn’t a problem: DigitalOcean plans to reduce its aggregate debt load with some of the proceeds, which will improve its profitability.
The company won’t trade for hours, so we’re done with DigitalOcean for now. File it in your mind as a win, as the company raised $50 million last year at a $1.1 billion valuation (PitchBook data). That’s a quick 5x.
Next up from the IPO treadmill is Kaltura, which released a first guess of its market value as a public company. Targeting $14 to $16 per share in its impending debut, the video software company is worth around $2 billion at the top end of its range, not counting shares reserved for its underwriting banks or other shares tied up in vested options and recruited stock units (RSUs).
The company’s value rises if you include those pieces of equity. Reading the company’s restated 2020 results — it ran into an issue regarding its “December 2020 estimate of the fair value of [its] common stock” — Kaltura posted full-year revenue growth of 24%, to $120.4 million. But that’s only part of the story.
This is the chart Kaltura wants investors to pay attention to:
Image Credits: Kaltura
What can we see here? Accelerating revenue growth during 2020. This chart also explains the timing of Kaltura’s IPO; you want to go public while your growth story is bulletproof. That chart is pretty excellent for giving investors FOMO; after all, if you don’t buy in now, what if growth accelerates further in Q1 2021 and you’re left having to buy in after the stock rises?
And then there was Robinhood, which has now filed privately to go public. Its public debut will be the opposite of Kaltura’s. The Kaltura debut is going to be fun to watch and analyze, but only us tech nerds are going to be paying close attention. Robinhood, in contrast, is a consumer phenomenon, which means its IPO is going to be a hot mess on stilts.
Robinhood has evolved from being an upstart with an interesting business model to an industry disruptor to a household name to the target of congressional hearings in rapid-fire fashion. The broad coverage of its operations implies that its IPO will earn similar coverage.
The numbers will be fascinating, of course, but I just wanted to highlight the impending goat rodeo. Some questions to frame our curiosity as we sit and wait for the S-1: How strong is Robinhood’s business apart from payment for order flow; how close to cash flow breakeven the company ran in 2020; and whether its sales and marketing expenses are rising as a percentage of revenue. And, of course, we’ll get notes on its various lawsuits and so forth in the document. Get hyped!
Finally on the IPO side of things, Zymergen. TechCrunch covered the company most recently last September, noting that it had raised a fresh $300 million round. Why did it raise so much money? Per our own reporting, the “new capital will be used to accelerate manufacturing of the company’s Hyaline film, which should be seen in commercial products as soon as next year, according to the company.”
Well, it’s now next year, so hit up the S-1 filing for more. Past that, I defer to people who actually know what synthetic biology is.
Late-stage news
Look, there have been at least four nine-figure rounds announced today. So if you want more on FourKites, head here; Feedzai, here; Airwallex, here; or Blockchain.com, here. We’re looking back a bit further.
Yesterday, SoftBank-backed delivery startup goPuff announced that it raised $1.15 billion at a valuation of around $8.9 billion. It’s not the first time that the service has raised a lot of capital in one go. It added $750 million to its accounts in 2019 and another $380 million in 2020. The company has now raised around $2.4 billion all in, per Crunchbase data.
So what? Well, DoorDash has seen its value drop from its recent highs to a more reasonable value. Will the food delivery company prove to be an oracle for the value of goPuff, namely that their shared multiples have declined since the height of the COVID-19 pandemic? Regardless, goPuff has oodles of cash now to keep expanding. Expect a filing from the company inside of 18 months.
Finally, Lattice. The company is a fresh unicorn after raising $60 million at a $1 billion valuation, it announced yesterday. Lattice makes software to help companies manage employees. Think a platform that helps folks handle reviews, one-on-ones and the dreaded “growth plans.” It’s apparently big business, and one, I reckon, that probably had a pretty good 2020 thanks to many companies moving to a more remote work setup.
Now we are caught up. Feeling better? I am. Now, back to work!