Well-funded tech giants could produce an epic 2019 for tech IPOs. But will any Washington-based companies make the leap?
Possibly not, as higher-profile brand names such as Uber and Airbnb take center stage on Wall Street.
Bill Bryant, a Seattle-based partner with venture capital firm DFJ, said the “IPO goal posts continue to push out” as investors demand higher revenues and growth metrics. As Bryant sees it, there aren’t as many well-qualified candidates in the Seattle region compared to 2018, a year which saw Avalara, DocuSign, Smartsheet and nLight go public.
That means 2019 could look like 2015, a year in which no tech companies from Washington state completed IPOs.
2019 could be a blockbuster year for tech IPOs as Uber, Lyft, Slack, Airbnb, others prep to go public
“You don’t want to be a small cap public company these days as there isn’t enough liquidity for institutional buyers and research analysts won’t cover a company with a market cap less than $2 billion,” Bryant said. “Being a premature public company is a rough place to be, as investors will gravitate toward the higher quality names. Patience will be rewarded in 2020.”
Even still, now is the time for predictions and there are a few IPO prognostications floating around with the new year approaching.
Will pet sitting marketplace Rover — fresh off a huge investment round— find its best friend on Wall Street? Could Seattle’s strength in enterprise software continue with Outreach or Amperity taking the plunge?
Investment data provider CB Insights, using its rating algorithm Mosaic, came up with a list of 286 possible IPO candidates as part of its an annual Tech IPO Pipeline report, including nine companies from the Seattle area: Amperity, Auth0, Chef, Convoy, OfferUp, Outreach, Qumulo, Rover and Skytap.
Minh Le, a market manager for Silicon Valley Bank’s Washington office, said he wouldn’t be surprised if none of the nine Seattle area companies on the list go public — “conversely, I would be surprised if more than two of them did,” Le added.
Algorithms can only tell you so much, so here’s our breakdown and analysis of CB Insights’ list.
GeekWire ranked the companies based on what we believe are the chances of the companies to go public in 2019. We also added a few more contenders — fast-growing companies including Remitly, Accolade, Spaceflight Industries, and Adaptive Biotechnologies — that should qualify based on our reporting and the GeekWire 200, our list of the top-ranked startups across the Pacific Northwest.
No. 13 — Amperity (GeekWire 200 rank: No. 140)
Amperity is one of Seattle’s hottest startups, launching 15 months ago and racking up a list of customers that includes GAP, Wynn Las Vegas, TGI Fridays, and others who use its customer data technology platform. The company made headlines in October 2017 when it raised investment from Tiger Global Management, a New York-based firm known globally for making long-term investments in companies including Spotify, Facebook, LinkedIn, Flipkart, and other tech giants. Led by founders who previously sold a healthcare marketing startup, Amperity could be an appealing IPO candidate, but like many companies on this list, its business is likely not mature enough for a 2019 public market debut. With the median time between first financing and public offering now standing at 10.1 years for companies that had an IPO in 2018, we think it’s too early for Amperity.
No. 12 — Skytap (GeekWire 200 rank: No. 34)
Founded in 2006, Skytap helps companies with legacy applications rebuild those apps for the cloud computing era. The company has raised $109.5 million in funding over the last decade, including a $45 million investment round led by Goldman Sachs in August 2017. Its CEO, Thor Culverhouse, said in April 2017 that Skytap would be ready for an IPO in mid-2019. However, the company slashed about 10 percent of its staff earlier this month as it works more closely with public cloud providers.
No. 11 — Qumulo (GeekWire 200 rank: No. 43)
Storage startup Qumulo has raised $230 million since launching in 2012, including a $93 million round this past June that was the company’s third funding round in the past three years. “This is enough capital where we get to decide whether or not we ever want to raise again,” Qumulo president and CEO Bill Richter told GeekWire this past summer. It’s not clear how the ongoing surge in cloud computing has affected Qumulo’s business. The company’s co-founder and former CEO Peter Godman departed in November and another prominent executive, Ken Cheney, also left Qumulo in recent months after joining last September, according to his LinkedIn profile.
No. 10 — Outreach (GeekWire 200 rank: No. 24)
The enterprise software startup raised $65 million this spring, announced it was moving into a new headquarters space this summer, made its first acquisition, and was the only Seattle company to crack the top 25 in LinkedIn’s Top Startups list for 2018. The 4-year-old sales engagement platform uses machine learning to help customers such as Cloudera, Adobe, Microsoft, Docusign, and others automate and streamline communication with sales prospects. Outreach CEO Manny Medina said the company would reach $10 million in revenue per quarter this year — probably not enough for Outreach to woo Wall Street, but still a fast-growing success story that could make for an interesting acquisition target in 2019.
No. 9 — Auth0 (GeekWire 200 rank: No. 12)
Auth0 brought its total funding to date up to $110 million after a $55 million cash infusion this past May as part of a Series D round led by Sapphire Ventures. The Bellevue, Wash. startup helps developers build identity authentication capabilities into their applications. Co-founder Eugenio Pace leads Auth0, taking over the CEO position one year ago after the previous chief executive Jon Gelsey stepped down. The company said it had a banner year in 2017, doubling its customer count and reporting revenue growth of 100 percent.
No. 8 — Spaceflight Industries (GeekWire 200 rank: No. 62)
Spaceflight, which handles launch logistics for small satellites, is a leader in a growing space industry. The company, founded nearly two decades ago, raised a $150 million Series C round in March, sending total funding past the $200 million mark. Its investors include The Space Alliance, Microsoft co-founder Paul Allen’s Vulcan Capital, Peter Thiel’s Mithril Capital Management, RRE Venture Capital and Razor’s Edge Ventures. Spaceflight Industries has two main business units: Spaceflight, which focuses on launch logistics; and Black Sky, which focuses on Earth observation and geospatial intelligence. The company is gearing up for its most ambitious mission yet: the “dedicated rideshare” launch of a SpaceX Falcon 9 rocket that will deliver 64 satellites to a pole-to-pole, sun-synchronous orbit.
No. 7 — Convoy (GeekWire 200 rank: No. 23)
Convoy launched just three years ago but has already raised $265 million, including a giant $185 million round this past September led by Google’s VC arm that propelled Convoy to unicorn status. The trucking startup backed by the likes of Jeff Bezos and Bill Gates has developed an on-demand technology platform that provides an alternative to brokers who traditionally use phone and email to facilitate transactions between trucking companies and shippers. Convoy CEO Dan Lewis told GeekWire that the company has received acquisition offers in the past, “but we have a big vision and we’re in an ideal position to go after it and see it through,” he said in September.
No. 6 — Chef (GeekWire 200 rank: No. 15)
Founded in 2008, Chef became a cloud industry leader, helping Fortune 50 companies automate their DevOps workflow. But this year the company went through what CEO Barry Crist called a “major strategy shift” caused by a reduced need for some of the earlier software development tools that got Chef off the ground. Chef cut 10 jobs last month and gone through executive shuffles since the company raised its last round of $40 million in funding three years ago. In October, Chef hired Evan Fein, an early Impinj employee who led that company to its 2016 IPO, as its chief financial officer. While Crist downplayed talk of an IPO in the near future, “there’s no reason this should not be a public company,” the CEO told GeekWire in October. While the hiring of a CFO is usually an indicator of IPO interest, an acquisition is more likely in our view.
No. 5 — Adaptive Biotechnologies (GeekWire 200 rank: No. 37)
Founded in 2009 by brothers Chad and Harlan Robins, Adaptive Biotechnologies is a leader among a crop of Seattle-based biotech ventures. The 200-person company, rumored as an IPO candidate in recent years, has raised more than $400 million to fuel development of its immunosequencing technology. In January, the company inked a partnership with Microsoft, which also invested in Adaptive Biotechnologies as part of a deal to build a universal blood test that can screen for dozens or even hundreds of diseases at a time. Biotech and life science companies often surprise with their IPO plans — note Alder BioPharmaceuticals, Juno Therapeutics and Immune Design, all of which went public in 2014. If any companies in the sector make it out in 2019, Adaptive could very well be the one.
No. 4 — Accolade (GeekWire 200 rank: No. 8)
Healthcare tech company Accolade is a relative newcomer to the Seattle region, having established a second headquarters in the Northwest after former Concur executives Mike Hilton and Raj Singh took the reins three years ago. It has continued to grow since then, upping its technology prowess and raising a $50 million round in March, bringing total funding to more than $200 million. The 11-year-old company guides millions of customers through the ins and outs of the healthcare system. Singh said in March that Accolade would consider an IPO in the future.
No. 3 — Remitly (GeekWire 200 rank: No. 6)
Remitly has long occupied a top spot on the GeekWire 200. Founded in 2011 by Matt Oppenheimer and Josh Hug, the company just expanded its mobile remittance service to 40 countries across the world. Remitly describes itself as the largest independent mobile remittance company in North America, allowing people to send money from one country to another, and now serves 600 send-to-receive corridors. It raised a big $115 million investment round last year led by PayU, an international online payment service provider and the fintech arm of Naspers, a global investment company with equity stakes in tech giants including Tencent and Flipkart. Now with close to 1,000 employees, Remitly is attacking a publicly-traded competitor in Western Union. The Denver-based money transfer company’s market value stands at $7.5 billion and its stock has fallen this year as it reported a one percent decline in sales during the third quarter to $1.4 billion. Seems like an interesting time for a new publicly-traded entrant, doesn’t it?
No. 2 — OfferUp (GeekWire 200 rank: No. 13)
There are few consumer startups in the Seattle area that have grown as large as OfferUp, the 7-year-old company that operates a mobile-focused used goods marketplace. OfferUp was aiming to raise a $150 million round this past summer; total funding to date is already $221 million. According to PitchBook data, OfferUp is the highest-valued tech startup in the Seattle region at $1.4 billion. “We’re now well on our way to leveraging our size and reach into building a real business with significant revenue and a clear path to profitability,” OfferUp CEO Nick Huzar said in August. “Our capital strategy is to achieve those goals by raising the right amount, with the right partners, on the right terms. This round will help us accelerate bringing on more top talent to expand on our mission of building the largest, simplest and most trustworthy local marketplace.” Washington state hasn’t produced many blockbuster consumer Internet companies on Wall Street recently, with real estate company Redfin as the only one in the past five years. OfferUp could reverse that trend, but likely will stay on the sidelines as it continues to invest in new ways to drive revenue.
No. 1 — Rover (GeekWire 200 rank: No. 5)
Perhaps no Seattle startup has answered more questions about a potential IPO in recent years than Rover. But instead of testing the public markets, Rover elected to raise capital from private investors as it explores new business lines. It reeled in a $155 million round in May. “When you are making investments in new areas that are going to be unpredictable and you haven’t figured things out, it’s great to be working with investors that understand those dynamics,” Rover CEO Aaron Easterly said in May. The recent investment round was led by T. Rowe Price, the publicly-owned global asset management firm that has backed companies like FlipKart, Glassdoor, Redfin, Twitter, Dropbox, and other tech giants. Born out of a Startup Weekend event in 2011, Rover nearly tripled net revenue in 2016 and 2017 and processes roughly one million bookings per month. It is facing increased competition from Wag, which raised $300 million from Softbank earlier this year. Just as Uber and Lyft are jockeying for position on Wall Street, you could see a similar lower key dog fight between Wag and Rover as both position themselves to lead the pack into the public markets.