Enterprise startup Zendesk is moving full-speed ahead toward its IPO, even though investors have cooled towards cloud companies in recent weeks.
Zendesk has not set a date for its first day of trading on the public markets, but it just priced its shares, according to documents filed with the SEC.
It plans to sell over 11 million shares at $US8 to $US10 a share. At $US9, the midpoint, it expects to raise about $US90 million. At that price, the company would be valued at $US632 million.
None of the major stakeholders are selling as part of the IPO and here’s something interesting about that: the SEC documents reveal that the company’s three founders do not have huge ownership stakes.
Co-founder and CEO Mikkel Svane owns 10%, which will be duluted to about 8% after the IPO. Co-founder and chief product officer, Alexander Aghassipour, owns about 8%, which will become not quite 7% after the IPO. Co-founder CTO Morten Primdahl isn’t listed among the principal stockholders at all.
Charles River Ventures holds the biggest stake, at 20% after the IPO, with Benchmark’s Peter Felton the next biggest, at 15%.
In February, Zendesk made news by adding three women to its board including Facebook’s head of PR Caryn Marooney, Betsey Nelson, former CFO of Macromedia and Michelle Wilson, Amazon’s former General Counsel.
At $US9 a pop, Marooney’s 162,500 shares will be worth nearly $US1.5 million and Nelson’s 193,749 shares will be worth $US1.7 million. Not bad for a few weeks of work.
Zendesk offers a cloud service that helps companies conduct customer support. It’s financials are similar to other growth-stage cloud startups. It has fast growing revenue and considerable losses: 2012 revenue was $US38.2 million which grew to $US72.0 million in 2013, an 88% growth rate, the company says. Net losses for 2012 were $US24.4 million and for 2013, $US22.6 million.
This could be a risky time to go public as investors attitude toward cloud stocks has softened. At the end of April, the BVD Cloud Computing index, a stock index of 37 publicly traded cloud companies maintained by venture firm Bessmer Venture Partners, was down about 29% per cent since it hit a peak in Februrary. Meanwhile, Box, another enterprise cloud startup, has reportedly delayed its IPO.
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