SendGrid Goes Public for $131M in First Techstars Accelerator IPO

Something rare happened this morning: A company that has gone through an accelerator program, SendGrid, has hit the public markets.

SendGrid raised $131 million by selling 8.2 million shares for $16 apiece, according to research firm Renaissance Capital. Both figures were higher than expected for the Denver, CO-based company, which is now trading on the New York Stock Exchange under the symbol SEND.ND

While companies that go through accelerator programs such as Techstars, like SendGrid did, have proven effective at raising money from venture capital investors, few have tried to take their businesses to the public markets. Twilio (NYSE: [ticker:TWLO]) is perhaps the closest example of a company being associated with accelerators and going public—though its proximity to those programs is related to its investors, including Dave McClure (500 Startups) and David Cohen (Techstars), who participated in early funding rounds, according to Crunchbase. Twilio, which raised $150 million in its IPO last year, also operated micro investment funds with 500 Startups for companies that used its service. (Twilio’s tool helps developers embed things like video and messaging services in their applications.)

SendGrid is the first startup to have gone through an accelerator to go public, according to Techstars, which fostered the company when it participated in the 2009 Techstars Boulder program.

“We were honored to be invited to help SendGrid open the market today,” said Techstars co-founder and co-CEO David Cohen.

Founded in 2009, SendGrid has effectively grown a global business. The company has software that helps its clients deliver e-mails to their customers, such as marketing materials from companies like Glassdoor or Spotify. SendGrid has more than 55,000 customers and sends messages to more than 50 percent of the world’s e-mail addresses, the company says.

SendGrid appears to be nearing profitability, too, which may have aided the market response. The company recorded $79.9 million of revenue in 2016 on a $3.9 million net loss, improvements from $58.5 million of revenue and a $5.9 million net loss a year earlier, according to a regulatory filing. (The company has $51.8 million of revenue and a $3.1 million net loss through the first six months of 2017.)

SendGrid hasn’t said much about what it plans to do with the $131 million of funding it raised. The company may invest in developing its infrastructure, research and development, expanding into new markets, and possibly acquisitions, according to the filing.

The company’s largest investors were venture capital firms Foundry Group, Bessemer Venture Partners, Highway 12 Ventures, and Bain Capital Ventures. The company has raised about $80 million in venture funding, according to Crunchbase and VentureDeal. SendGrid listed $89.3 million of additional paid-in capital in a regulatory filing.

Despite the growth of messaging apps, e-mail remains a heavily used medium of communication in business, according to Will Conway, CEO of Mailgun, another San Antonio, TX-based e-mail delivery service. E-mail, in-app messaging, and texting complement each other in business services, Conway contends.

“What’s exciting about SendGrid’s IPO is that it’s validating the developer SaaS [software as a service] market and, more specifically, the email developer SaaS market,” Conway wrote—in an e-mail. “E-mail is still the most trusted form of business communication, which is why it continues to grow despite the popularity of in-app messaging and SMS.”

Beside Techstars and 500 Startups, other larger accelerator programs like Y Combinator and AngelPad say they haven’t had any companies successfully enter the public markets. Some of San Francisco-based AngelPad’s companies, including delivery service Postmates and video advertising service Vungle (both based in San Francisco), have made statements that they may plan an IPO in 2018 or 2019, according to AngelPad co-founder Thomas Korte.

Other companies, like Dropbox, which participated in Y Combinator, have long been rumored to be ready for the public markets.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at [email protected] Follow @xconholley

Trending on Xconomy