Meditations
EquityZen's Blog On Startups and Their Economics

Pure Storage: The Path to IPO ($PSTG)

Phil Haslett | October 08, 2015


pure-storage-ipo
Pure Storage, a flash-storage company backed by venture investors Sutter Hill, Greylock Partners, Index Ventures, and Tiger Global, started trading on the public markets yesterday.


As we've done in the past, we took a look and visualized how pre-IPO investors did. We asked a few questions:

  • What level of return did early investors generate?
  • How did the last private investors do?
  • Who are the big winners?

Way to go, Sutter Hill Ventures!

It's a good day to be a limited partner of Sutter Hill Ventures. The Palo Alto based venture firm owns 27% of the company, worth $745 million at the $17/share IPO price.

Sutter Hill should be rewarded for its early belief in Pure Storage: they led the company's $5 million Series A funding round 6 years ago, at $0.21/share (good for an 8000% return).

Ho-hum returns for late-stage investors

Assuming that Pure Storage continues to trade at $17/share, the last private investors (Wellington, To Rowe Price, and Tiger Global) will generate an 8% return. While that may sound decent, it probably doesn't justify the risk that those investors saw in the investment when they put over $200 million into Pure Storage's Series F financing in April 2014.

We got it right! (Sort of)

EquityZen used historical IPO and venture data to predict the Pure Storage IPO back in early September. We predicted:

  • a $522 million IPO (Pure Storage raised $500 million)
  • a $21.86 share price (Pure Storage priced at $17 per share)
Hey, 1 out of 2 ain't bad.


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