The IPO window is open
0Reported today on TechCrunch
For the full article visit: https://techcrunch.com/2019/12/12/the-ipo-window-is-open/
The IPO window is open
Hello and welcome back to our regular morning look at private companies, public markets and the grey space in between.
This morning we're digging into the current IPO market, asking ourselves how much damage WeWork really did to other companies hoping to go public. Is the IPO window closed, and if not, what sort of companies can still get out?
There's some good news out today for late-stage startups looking to debut - along with a few impending tests regarding the market's appetite for risk that we should understand as we head into 2020.
Bill.com's good news
In terms of IPOs, Bill.com's felt comfortably standard for 2019. Bill.com was a heavily venture-backed company that had raised just under $350 million while private across myriad rounds, and by the time it wanted to go public it still lost money.
At the same time, the company had a number of strengths. These include historically slim losses as a percent of revenue ($7.3 million in its most recent fiscal year, against $78.4 million in revenue), differentiated revenue sources (subscription income and rising interest payments), and improving gross margins (74 percent in its most recent quarter, up from a little under 72 percent in the year-ago period).
Those factors combined were sufficient to entice investors to price the company's IPO far above its initial expectations of $16 to $18 per share. Instead, Bill.com raised its range once and then priced above the higher interval. At $22 per share, the company's value rose by about 60% compared to its most recent private financing. (You can read more on the debut here.)
This matters as WeWork was said to have closed the IPO window for companies more focused on growth than profits. The way the market reality was discu