Allbirds flotation should help the market sort the value of tech-enabled IPOs

Allbirds is a tech-enabled shoe company that raised a series of venture capital rounds since mid-2015, per Crunchbase data. And it’s going public.

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The company’s IPO would be something we’d cover regardless of how it fit into — or didn’t — a particular trend that we’re watching in the larger startup market. But luckily for us, Allbirds’ IPO pricing not only reprises its own value but also provides a bit more context concerning what related startups may be worth.

That’s thanks to its status as a “tech-enabled company,” as opposed to a pure technology outfit. To reiterate our notes concerning the distinction between the two, we consider Allbirds tech-enabled instead of tech proper because it uses technology methods (e-commerce, in its case) to improve on a traditional business (making and selling shoes), instead of, say, operating a purely digital marketplace where others sell wearable goods.

You can use a gross-margin test for this sort of distinction, if you want to be technical.

“Tech-enabled” may sound like a pejorative, but it’s not. It’s a descriptor, and one that is only rude if you are hoping that tech-enabled businesses will attract pure-tech valuations, and, implicitly, larger revenue multiples than may be truly warranted.

Allbirds gave us pricing information for its IPO this week, providing another window into the world of tech-enabled valuations. A key topic, given that we just saw Rent the Runway price its IPO quite well and we have Sweetgreen in the wings.

With lots of pure tech companies going public, and enough tech-enabled unicorns debuting at the same time, we can break the two groups into distinct cohorts.

With that, let’s talk Allbirds and what its expected revenue multiple tells us about how such companies are valued. Hint: We appear to be narrowing on a price range.

Allbirds’ IPO valuation

In an S-1/A filing this week, Allbirds disclosed that it expects its IPO to price between $12 and $14 per share. The company is selling 15,384,615 shares itself, with an option to sell another 360,415 shares under certain conditions. That works out to as much as $220.4 million in gross receipts for the company itself, not including shares being sold by existing stockholders.

After its IPO, Allbirds expects to have 143,480,229 shares outstanding, inclusive of the full whack of shares offered to underwriters that they may or may not purchase. Using that max share count, and the upper end of Allbirds’ current IPO price range, the company would command a valuation of $2.0 billion.