Some predicted the U.S. tech IPO window would open wider this year, but it’s still just a slit.
Only 14 tech companies have held initial public offerings in the U.S. this year, Bloomberg reported this week. (Notable IPOs include Snap, Blue Apron, and Redfin.) That follows 19 U.S.-listed tech IPOs last year and 28 in 2015. By comparison, at least 34 companies went public in the U.S. markets each year from 2010 through 2014, according to Bloomberg.
None of this year’s tech IPOs have come from the Boston area. But the local tech community could avoid a 2017 IPO shutout if CarGurus follows through on its plans to go public, which were revealed in an SEC document filed last Friday. The Cambridge, MA-based company said it could raise $100 million in an IPO, although that early figure will probably change. It would trade on the Nasdaq stock exchange under the ticker symbol “CARG.”
The Boston tech scene is known for software and hardware companies that sell products to other businesses—think data storage and analytics, networking infrastructure, cybersecurity, marketing software, and the like. But the region has produced some notable consumer tech companies that have gone public in recent years, including TripAdvisor (NASDAQ: TRIP), Wayfair (NYSE: W), and Kayak (now owned by Priceline). CarGurus—which operates an online marketplace for buying and selling new and used cars—could be next.
Founded in 2006 by TripAdvisor co-founder Langley Steinert, CarGurus has built a profitable business that generated $198.1 million in revenue last year. That was more than double its 2015 revenue of $98.6 million. The company generated $143.3 million in revenue and turned an $8.5 million profit in the first half of this year, according to the SEC filing.
CarGurus funded itself through 2014 with about $5 million from outside investors, according to the filing. It has since raised at least $128 million from private backers, including T. Rowe Price Associates, Fidelity Brokerage Services, Winslow Capital Management, and Foxhaven Asset Management. (Steinert is the largest shareholder, with about 61 percent of the voting power.)
CarGurus has flown under the radar for much of its existence, growing its traffic mainly through digital marketing and word of mouth, it has said. But it’s starting to make more noise—it launched its first TV advertising campaign this year.
Now, CarGurus could breathe some life into the slumping Boston tech IPO market. Just two local tech companies went public in 2016 (Acacia Communications, Everbridge), and there was only one in 2015 (Rapid7). There were five in 2014 (Care.com, Imprivata, CyberArk, Wayfair, HubSpot).
At the beginning of this year, my short list of Boston-area tech IPO candidates included Fuze, Carbon Black, Actifio, and Veracode. The first three remain privately and independently held, while Veracode got acquired by CA Technologies in March.
Below is my updated short list. A few of the companies have signaled they intend to go public at some point, but my basic (and subjective) criteria were companies that have raised more than $100 million in venture capital, have been around since at least 2010, and have reported growth in revenues and/or employees in the past couple of years. The list is not meant to be comprehensive, merely a conversation starter. (Tweet your reaction @JeffEngelXcon.)
Without further ado, here are my top-five picks, plus one dark horse:
1. Fuze is arguably the closest-watched tech IPO hopeful in the Boston area. The 12-year-old company, which provides cloud-based business communications software, has pulled in $334 million in venture capital, including a $134 million funding round raised earlier this year. Co-founder and executive chairman Steve Kokinos told Xconomy in February that his company will “likely” go public in 2018.
Boston-based Fuze has retooled its management team in recent months, perhaps in preparation for its next chapter. The moves include appointing a new chief executive (replacing Kokinos), chief financial officer, chief people officer, chief information officer, general counsel, and head of services and support.
2. There were reports a year ago that Carbon Black had filed confidential documents with the SEC prepping an IPO. The deal hasn’t happened yet, but that doesn’t mean the Waltham, MA-based cybersecurity company won’t pull the trigger. Founded in 2002 as Bit9, the company has raised over $191 million from private investors.
3. Back in 2013, Actifio founder and CEO Ash Ashutosh talked openly about his intention to take the Waltham data-management company public. He has apparently backed off from those plans, and told the Boston Business Journal at the end of 2016 that there was less pressure to go public. Nevertheless, that hasn’t stopped the speculation. Don’t be surprised if eight-year-old Actifio—which has snagged at least $208 million in venture capital—makes the leap to the public markets at some point. … Next Page »