- DocuSign, expected to IPO next week, has offered a price range for its shares.
- At the mid-range, it would value the company at $US3.8 billion, slightly higher than its last round of private investment.
- We now have a glimpse at the company’s condition in 2016, when it famously spent the entire year struggling to hire a new CEO.
- The company’s founders are not significant stakeholders anymore. But there will be a few other big winners, including former CEO Keith Krach.
DocuSign is gearing up for its IPO, expected to take place next week, and has floated an initial price range between $US24 and $US26 for the 21.7 million shares it will sell.
At the mid-price of $US25 a share, this would see DocuSign enter the public markets with a $US3.8 billion valuation, up from its last private valuation of just under $US3.1 billion, according to Pitchbook, a database that tracks such things.
In terms of financials, DocuSign had losses of $US52.3 million on revenues of $US518.5 million for its last fiscal year, with revenues rising and losses narrowing. Its previous fiscal year, it lost $US115 million on revenues of $US382 million.
DocuSign’s road to an IPO has been a long one. The company was founded in 2003 by Tom Gonser, Court Lorenzini, and Eric Ranft. Ranft left the startup after two years, according to his LinkedIn. Lorenzini was CEO for five of its early years but left that role in 2008. Neither Lorenzini nor Ranft are mentioned in the company’s S-1 forms to go public, meaning they have neither a significant stake in Docusign, nor a meaningful role.
After cycling through a couple more CEOs the company than added the flamboyant Keith Krach as chairman, who later took on the CEO role, too.
Krach has since become the person most closely associated with DocuSign. Krach had previously founded Ariba, another successful enterprise cloud software company, which SAP bought in 2012 for $US4.3 billion.
Under Krach, Docusign started raising huge sums of money from venture capitalists, private equity funds, and its strategic partners including Dell, Microsoft, Intel, and Deutsche Telekom. In 2015, DocuSign raised over $US551 million at a valuation of just under $US3.1 billion.
A rocky 2016
Things seem to hit the skids for the company in 2016 when VCs started being tighter with their investments. Krach announced he was leaving the CEO job. But the company had difficulties hiring a new CEO, including a memorable instance where one guy bolted at the last minute to join Google.
Thanks to the forms filed with the SEC, we can now see the financials of the company in 2016, amid the turmoil. It lost $US122.6 million on revenues of $US250 million. So, as many people suspected, the company’s burn rate – the degree at which it spends cash – was pretty high.
Finally, in January, 2018,DocuSign hired a CEO, Daniel Springer. By the time he joined, Krach had started to reduce the company’s spending compared to revenues. Krach is still chairman.
Gonser is now hailed as the sole founder. He is credited with coming up with the idea for electronic signatures, as well as holding some patents on the tech, and is still involved as a board member. However, he cashed out a lot of his stake years ago and became a VC. He sold $US9.8 million worth of shares in 2015, and sold another $US3.3 million in 2016.
He still has over 2 million shares, though, which amounts to just over a 1% stake in the company
Krach is the single largest individual shareholder, not affiliated with a venture investment firm. He holds a 5.5% stake, or about 8.5 million shares. He’s cashing out a small chunk of shares in the IPO, about $US4 million worth at the mid-price, $US25 level.
Other winners should this IPO prove successful: Peter Solvik at Investor Sigma Partners who owns bout 17.4 million. This is by far his biggest investment win and he’s cashing out over 850,000 shares in the IPO for his fund.
Another winner is former Intel and Apple exec Scott Darling of Frazier Technology Ventures, who owns about 9.7 million shares and is cashing out about 496,000 in the IPO.
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