Weekly Update #193: Cloudera IPO and Dual-Track Processes for Private Tech

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Hello Investors,


Cloudera files for IPO

After much anticipation, Cloudera has registered its S-1 with the SEC. If you want to read the 200-page S-1, click here. If you're short on time, read Tom Tunguz' summary: Benchmarking Cloudera's S-1 - How 7 Key SaaS Metrics Stack Up.

Cloudera goes for BIG customers, trailing only Workday and Veeva in ARPC ($332K for Cloudera). Source: Tom Tunguz blog

Dual-Track Process: Trying to IPO and Get Acquired

You've likely seen some news about private tech companies running a "dual-track process" leading up to an IPO. It's a rather simple approach, where a late-stage tech company files for their IPO while also trying to sell the company to a strategic buyer or private equity firm. It can be rather efficient, as the added amount of added regulatory work for an IPO prepares a company to have all its ducks in a row to talk with acquirers (financials are in order, all board resolutions are signed, etc). Furthermore, the confidential S-1 filing process (a part of the JOBS Act of 2012), allows a tech company with less than $1 billion in annual revenue to start the initial draft of their IPO with the SEC without disclosing to the public.

As a company, if you can keep a tight lid on both the confidential S-1 and the M&A talks, you can discreetly assess the best way to maximize shareholder value. But, that's easier said than done.

Recently, Bloomberg covered the trend amongst tech companies (Silicon Valley Startups Favor IPOs Over Deals as M&A Languishes), reporting the following companies holding M&A talks:

The article suggests that at least 5 large tech companies (worth over $1 billion) have held active sales talks, but walked away based on low offer prices.

What does this mean for pre-IPO investors? It would appear the JOBS Act is indirectly benefitting existing private tech shareholders (employees, founders, VCs, secondary investors) by providing them an affordable path to run a dual process, and generate larger shareholder returns.

In other news...

Phil Haslett
Founder + Head of Investments, EquityZen


Funding Rounds Since Last Week

Looker - Looker catches the fancy of CapitalG, Goldman and Geodesic with $81.5M Series D

Qumulo - Data storage and analytics startup Qumulo raises another $30M, total funding up to $130M

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