On Wednesday, OnDeck Capital, an online lending platform for small businesses, raised $US200 million through its IPO. Its shares jumped nearly 34% on the first day of trading, valuing the company at around $US1.8 billion.
OnDeck’s strong IPO is an indication of growing investor confidence in tech companies. In just the past week, we’ve seen four tech companies (including OnDeck) hit the public market, all seeing nice first-day pops at valuations exceeding $US1 billion.
The company leading the pack is Lending Club. Similar to OnDeck, Lending Club is an online marketplace for loans. But it works as the middleman, not the actual lender, to connect lenders and borrowers. Its shares surged nearly 56% last Thursday on its debut, raising over a $US1 billion (after all options were exercised Tuesday). That marked the largest US tech IPO of the year. Lending Club now trades at over $US27, up 80% from its opening price.
And then on Friday, the public market welcomed two data analytics firms, Hortonworks and New Relic. Hortonworks is a company that specialises in Hadoop, an open-source technology that helps organise large amounts of data on low-cost hardware. It’s one of the biggest companies in the space and is used by all kinds of companies, including eBay, Spotify, and UC Irvine Health. It closed almost 65% up on its debut, and the company is now worth $US1.02 billion.
New Relic also specialises in “big data,” but has a more specific function. It monitors the performance of web applications and keeps tracks of all the data coming in from it. It also has a huge user base across all sectors, including Microsoft, Nike, and Walmart. New Relic shares also rose almost 50% on its first day.
What all this implies is that public investors may be starting to warm up to tech IPOs. Earlier this year, the market went through a correction period for tech companies, especially the software as a service companies, which led to upstarts like Box to push back its IPO for months. Now it seems like the market is reversing course. One thing to note: Similar to Box, all four companies that went public the past week are growing sales at a rapid clip, but at the cost of widening losses.
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