Today, Twilio announced that it would set the price of its' first offering to the public at fifteen dollars per share. This values the firm at about $1.23 billion, which is over its' prior one billion dollar valuation from the previous financing round.
The firm expects to make about 150 million dollars, with an additional 1.5 million shares available for sale. Also, this is a bigger price than the twelve to fourteen dollars per share amount that the firm targeted in the past.
The Twilio IPO is important, because tech IPOs have dried up considerably in 2016. Concern has spread among many small businesses that have run into problems, due to the dearth of tech IPOs this year (Twilio is just the third of 2016). Most startups hope that Twilio will revitalize the tech IPO industry, with a good showing once trading starts tomorrow.
Assuming this occurs, it may persuade investors that lots of startups that have received generous valuations have returned to reality, and that these firms would be good investments if they opt to go public. In the case of Twilio, the firm reported a $35.5 million net loss on $166.9 million of revenue in 2015. However, it has demonstrated good revenue growth, and the firm has generated $88.8 million revenue since 2014.
Investors have exercised caution before investing in growth firms, because valuations have flat lined, and sometimes even reduced, among startups that concentrated primarily on growth rather than profitability. The mindset of startups has changed, and now they know that they can't just use up venture capital, in the hope that public markets will admire their tireless focus on growth instead of making cash.
Twilio has acquired over 200 million dollars in venture capital, with the biggest slice of the firm owned by Bessemer Venture Partners - at 28.5 percent in its' previous IPO filing. It will be interesting to see whether tech IPOs are back in vogue, when Twilio starts trading again tomorrow.
Twilio ends the Tech IPO drought