One year to the day of the troubled Facebook IPO, the climate for tech IPOs in the public markets is significantly less stormy, especially for companies in the enterprise space. Today, not one but two, Tableau Software and Marketo, are debuting on New York stock exchanges. Business intelligence provider Tableau Software, trading as “DATA”, is one of the more highly anticipated tech IPOs of the year, and so far it has not disappointed. It priced its IPO at $31 per share, and it has popped 58% and is at nearly $49/share in early trading on the NYSE.
Meanwhile, Marketo, a cloud-based marketing services company, priced its IPO at $13 per share. It will be trading as MKTO on the NASDAQ exchange,
but has yet to trade at the time of writing. It went up by more than 50% in early activity and then continued to creep up: it’s now 68% above the IPO pricing and trading at $21.48. (We’ll keep updating these numbers for both stocks.)
Taken together, the two are strong endorsements for the market for enterprise services and some of the still-emerging trends within it.
Tableau Software, as its stock ticker unsubtly hints, is aimed more at a big-data play, offering visualization and analytics that it says are easy enough for non-technical people to use. Up to now, it still offers the majority of its services as downloadable, on-premises software rather than as cloud-based apps.
Marketo is positioned as a software-as-a-service, and like a Salesforce for the marketing department, offers its various services — inbound marketing, lead management, social marketing, event management, instant CRM integration, sales dashboards, and marketing ROI reporting and analytics — all in a one-stop-in-the-cloud-shop.
Tableau Software raised some $254.2 million at the $31/share price, after raising that IPO from an initial range of $23-26; this gives it a valuation of $2 billion. Marketo, meanwhile, is raising just under $85 million at a $550 million valuation.
(Incidentally, Facebook’s shares have lost some 30% of their value in the last year, and are at around $26.45/share at the moment.)
How does Tableau’s IPO compare to other high-profile enterprise listings? The money raised is just shy of the $260 million that enterprise security company Palo Alto Networks raised in July 2012. It is still a ways behind HR specialist Workday’s IPO in October 2012, which raised $637 million.
Tableau Software’s multi-billion IPO sets the stage for other multi-billion tech IPOs from the likes of Box and Twitter. Tableau had raised less than $40 million prior to this from NEA and Meritech (Crunchbase puts the total at only $15 million, but Geekwire says that NEA’s total investment in the company has been $29 million).
In contrast, Marketo has raised $108 million in six rounds, from investors that include Institutional Venture Partners, InterWest Partners, Mayfield Fund, Storm Ventures and Battery Ventures.
Anthony Noto, the global co-head of Goldman Sachs’ global telecommunications, media and technology group in investment banking, took the stage at this morning’s TechCrunch Disrupt NY 2013 event to talk about the IPO market, trends, and other topics related to tech companies going public. In one interesting portion of the conversion, Noto offered his opinions on what startups should look for when they’re ready to hire their first CFO.
Noto, for those unfamiliar, has a diverse background in the industry. Before serving as co-head of the Technology, Media and Telecom (TMT) Group at Goldman Sachs, he was co-head of the Global Media Group for TMT Investment Banking. He rejoined Goldman Sachs in 2010 after serving as the National Football League’s executive vice president and chief financial officer for nearly three years, where he oversaw finance and strategy functions, including corporate development, labor finance, operational finance and accounting, tax and treasury. And before the NFL, Noto was the Internet, Entertainment and Cable Equity Research analyst and business unit leader for the Communications, Media and Entertainment Equity Research team at Goldman Sachs. He has also worked at Lehman Brothers, as brand manager at Kraft Foods, and was a U.S. Army Ranger.
One thing Noto stressed, when making his recommendations about what kind of person founders should consider for the CFO position, is that it should be someone you can trust. Whether or not it’s someone who has prior CFO experience is not as important, he explained, saying instead that what this person really needs is the “intellectual capacity and conviction” and is someone who can tell you when you’re wrong.
“The CFO of 50 years ago was an accountant and controller and they made sure that the numbers were audited appropriately and they were disclosed and disseminated appropriately,” he said. “Today, a CFO needs to be more of an operating CFO,” Noto added, “someone who’s using the financial data and the data of the company to help drive strategy, the allocation of capital, and the management of risks.”
You need a partner on your side who can help you make decisions, he said. Questions that you should ask yourself about your potential hire include, “Are they a leader? Can they use data to drive decisions? Can they command respect? Can they drive credibility and hold people accountable?”
And when should a company hire a CFO?, asked panel moderator TechCrunch’s Colleen Taylor.
If it’s an early stage company with less than a hundred people, you don’t need a world-class CFO, said Noto. You need partners and advisors to help guide you. ”But as you start to enter the point of needing to generate revenue and needing to raise capital, because you can’t do it easily and efficiently, you need a CFO,” he concluded.
Watch the video below for more of his thoughts on what makes a company a tech company, what IPOs were right on time (LinkedIn, Yelp), and what the IPO market will bring in the future.
The rest is here: Goldman Sachs’ Anthony Noto On What To Look For In A CFO
In March last year Yahoo’s SVP of the Europe, the Middle East and Africa region abruptly quit his role in the rejuvenation of Yahoo, supposedly to be closer to family in Sunnyvale. However, after an orderly departure he’s now joined Shazam, the mobile music discovery app as CEO. Longtime CEO Andrew Fisher (since 2005) will become executive chairman. The London-based Shazam says it now has 300 million users in 200 countries, with 90 million of them in the U.S. and calls itself a “media engagement company.”
Add to this the recent hire of the BBC’s Daniel Danker as Chief Product Officer, and Shazam now says it’s on a path towards an IPO. The company has raised $32 million since starting out in 2002 from investors, including Kleiner Perkins, Institutional Venture Partners, Acacia Capital and DN Capital. The London tech market has become a better potential platform for IPOs following recent legislative changes.
Fisher said in a statement “Whilst Rich will run our business I will now spend more time focusing on our corporate development and future strategy, including our ambitions to deliver a successful IPO for our shareholders as we look to become an increasingly important part of people’s everyday lives.”
Shazam says it has over 60 million monthly active users who can hold the smartphone app up close to a nearby source of music and get a notification about what music is being played based on its database of 27 million tracks. The effect is a little like magic and has further potential applications in a number of media scenarios. Because you can directly buy the tune, this means Shazam will have the ability to drive $300 million in sales via affiliate partnerships with Apple iTunes and Amazon.
It’s also recently launched a TV service that provides info on the music being broadcast and other show information enabling users to rent or buy further content and “clickable” ad links.
John Pearson, who has been chairman of the board since 2006, will become a non-executive director and remain on the board.
Dow Jones Venture Source released its quarterly report on the state of venture capital, including data on number of VC deals, funds raised, M&As and IPOs in the technology sector. According to the report, U.S.-based companies raised $6 billion from 752 venture capital deals in Q1 2013, an 11% decrease in capital and a 6% decrease in number of deals from the previous quarter. Compared to the same period in 2012, there was an 11% decrease in deals and a 12% decrease in amount invested. Additionally, median pre-money valuation dropped 79% from 4Q 2012.
Deals in Information Technology (IT), Healthcare, Energy and Utilities, and Industrial Goods all declined, and deals in Business and Financial Services, Consumer Goods, and Consumer Services investment increased from the previous quarter.
The largest funding deals in the Internet and IT sector included Pinterest’s $200 million raise and Living Social’s $110 million raise. By VC firm, NEA was the most active investor with 22 deals, followed by 500 Startups, Andreessen Horowitz, Y Combinator and Greylock Partners, respectively.
In terms of VC funds, 43 funds raised $4.2 billion in Q1 2013, a 16% increase in number of funds and 65% increase in amount raised from prior quarter. The big raise for the quarter by a VC fund was Battery Ventures X LP, the largest U.S. venture capital fund of the year, raised $650 million, accounting for 15% of the total amount raised in the quarter. Spark Capital announced a new $425 million fund and Redpoint raised $400 million in the quarter. The median U.S. fund size for the quarter was $143 million.
Despite a 16% drop in raised capital, healthcare saw the largest investment allocation by sector with 162 deals raising $1.9 billion and accounting for 30% of the total venture capital investment. IT reported a 30% decrease in amount invested with $1.9 billion in 256 closed deals, 10% drop in number of deals compared to the previous quarter.
M&A activity declined in the first quarter of 2013, with the fewest exits since the first quarter of 2009. Acquisitions totaled $4.3 billion, a 44% decrease in M&A activity and a 24% decrease in capital raised compared to the previous quarter.
In terms of IPOs, Nine venture-backed companies raised $643 million through public offerings in 1Q 2013, a 55% year-over-year drop from $1.4 billion raised by 20 IPOs in 1Q’12 and a 47% decrease compared to the previous quarter. The largest IPO of the quarter was Marin Software, which completed a $105 million IPO.
A number of Silicon Valley investors are starting the long weekend with a smile. That’s thanks to Xoom Corporation, the online money transfer technology and services company, which made a very successful debut today on the NASDAQ stock market.
The company’s stock zoomed (sorry, I had to do it) up a full 59 percent from its $16 per share initial public offering price to close out the trading day at $25.49. The IPO price itself, announced yesterday, was a boost from Xoom’s previously projected share price range of $13 to $15.
Xoom collected $101.2 million in proceeds from the offering, which it says it will use for the standard things — business growth and M&A. It’s a nice turnout for Xoom and its venture capital investors, who include Sequoia Capital, New Enterprise Associates, Agilus Ventures, and DAG Ventures, among others. The company collected $80 million in annual revenue in 2012, according to its IPO filing.
Xoom, which was founded in 2001 and has raised a total of $78 million in outside investment, has never been the “sexiest” of companies and has flown under the radar a bit from a press perspective — perhaps that’s because its product is finance-based and not consumer facing. But it has amassed support from a some of the most prominent names in the tech industry and particularly the online payment space, counting two PayPal alums — Sequoia Capital partner Roelof Botha and former Square and Slide exec Keith Rabois — as board members. Also on the board is Xoom’s founding CEO Kevin Hartz, who handed over the reins of the company to current CEO John Kunze in October 2005 to serve as co-founder and CEO at Eventbrite.
It just goes to show once again that for all the buzz in recent years about consumer-facing startups, when it’s all said and done, some of the biggest success stories of the current tech boom may be lower profile companies with an enterprise bent.