In private markets, information is hard to come by. For limited partners, venture capital funds and VC wonks, insights into upcoming liquidity events can signal the heating up of initial public offering (IPO) and M&A markets, validate (or rebut) a VC fund’s claim to have picked top winners and hint at the return potential for institutional VC allocations upon a fund’s expiration. In that light, Trusted Insight presents its November edition of The Liquidity Watch List to highlight companies with a high degree of likelihood to be acquired or pursue a public offering in the near future.
In October, Trusted Insight forecast that in the next 13 months Spotify, Snapchat, AppDynamics and Okta will issue an initial public offering and Lyft will likely be acquired. This month, we maintain those positions and will add two new private firms to the watchlist.
Description: This San Francisco-based company provides electronic signature technology and digital transaction management services for facilitating electronic exchanges of contracts and signed documents. Core offerings include authentication services, user identity management and workflow automation.
Total Funding Raised: $555 million
Latest Financing: Preferred equity financing on October 8, 2015 at a post-money valuation of $3.1 billion
Notable Investors: Bain Capital Ventures, Accel Partners, ClearBridge, Citi Ventures, Deutsche Telekom, Intel Capital, Dell Ventures, IT Venture, Microsoft, Wellington Management, ICONIQ Capital, Comcast Ventures, Fidelity Investments, GV, Ignition Venture Partners, Generation Investment Management, Bessemer Venture Partners and Kleiner Perkins Caufield & Byers.
Expected Liquidity Event: IPO or Acquisition
Argument: DocuSign is set to pursue an IPO following the hiring of executives with public experience over the past few years. Chief Financial Officer Michael Sheridan was the CFO of FireEye during its IPO, and General Counsel Reggie Davis was general counsel of Zynga during its public debut; both hires were made within the past two-and-a-half years.
DocuSign is equally ripe for acquisition. Larger companies that have workflow solutions, but not digital signature products are likely to make offers due to DocuSign’s product synergy with other document management offerings. Smaller startups in this sector that have been acquired in the past are DotLoop (to Zillow), Cartavi (to DocuSign), RightSignature (to Citrix Systems), Silanis Technology (to VASCO Data Security) and EchoSign (to Adobe).
Description: This Palo Alto-based company is a developer of software applications for integrating, visualizing and analyzing information.
Total Funding Raised: $2.7 billion
Latest Financing: $880 million Series K preferred equity financing on December 23, 2015 with a latest post-money valuation of $20.5 billion.
Notable Investors: FJ Labs, IT Venture, Nima Capital, Rising Tide Fund, Saints Capital, Seeds-Resolute, Dover Madison Capital Management, Aeon Funds, Blackrock Private Equity Partners, Mithril Capital Management, Third Point Ventures, Founders Fund, In-Q-Tel, Granite Hill Capital Partners, GSV Capital, The Lucas Venture Group, Tamares Group and Tiger Global Management
Expected Liquidity Event: IPO
Argument: Although Palantir seems like an unlikely candidate given its list of clients that value confidentiality, there are telling hints that the company may IPO. In Q2 2016, the company repurchased $225 million in stock. The multi-million-dollar stock buyback was not only seen as an outlet to free up liquidity for long-time employees, but also as a way to clear up Palantir’s cap table in preparation for a potential IPO. In addition, Fortune reported in October that CEO Alexander Karp is positioning the company for an IPO in order to provide employees liquidity.
“We’re now positioning the company so we could go public,” Karp said at a Wall Street Journal conference in October. “I’m not saying we will go public, but it’s a possibility. Either we will go public, we will do an offering, we’ll do something on the private equity side, or we will use all of our profits or as many as we can in consultation with investors to redistribute them to employees.”
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