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Except that its a Canadian company, its a regular IPO. $100m in software revs reasonably supports a $1b valuation. The company has been working hard for nearly

by pbreit 12y ago

Except that its a Canadian company, its a regular IPO. $100m in software revs reasonably supports a $1b valuation. The company has been working hard for nearly 10 years with relatively limited VC involvement. I don't really understand your post in this context.

ditonal 12y ago
First of all, limited VC involvement? They raised $122 million from VCs: https://www.crunchbase.com/organization/shopify https://www.crunchbase.com/organization/shopify These investors include VC firms like First Mark Capital, which are NYC based - and oh yeah, the exact same VC firm that was the biggest investor in the startup I worked at that I said is in freefall but now getting positive financial press. It's not about whether the VCs are running operations, it's about whether the VCs are worried they won't get their money back without an IPO, which seems like a genuine concern for an operation that's losing money. As to your second point of confusion, your pointing out its a Canadian company as if what I'm saying doesn't apply: "We qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies in the United States. These provisions include:" They are IPOing on the NYSE so they are still regulated by the SEC, and if you actually read the filing you will note that they are using the new JOBS act in order to IPO. What I'm saying is not unrelated to anything, Shopify is one of the first companies to take advantage of these new changes in regulation. Maybe Shopify specifically isn't a shaky company, but I do think the doors have been opened for shaky companies without much scrutiny to be sold to a public that has been misled by PR.
- pbreit 12y ago
  Yeah, but they bootstrapped for 5 years and the same 3 funds anchored each round. They were fairly successful before taking any money. My bad. You gave the impression (to me, at least) that this was some sort of shaky, small situation when it was anything, but. If anything, there are way too few IPOs these days. The only people making money on new company creation are venture investors. Also, something like 85% of the IPOs in the last 2 years have used the new JOBS rules, so it's not really "one of the first". The threshold is $1b in revenues, after all, quite a rarity at the IPO stage.
cperciva 12y ago
Does $100M/year in revenue and $-25M/year in profits really make a company worth $1B these days?
- pbreit 12y ago
  Absolutely. $100m in revs is basically the magic number for $1b IPO. And a growth company should be "losing" money. Otherwise it's run out of ideas on how to make money which is a red flag.
  - cperciva 12y ago
    I clearly need to abandon my profitable and steadily growing SaaS business and launch a startup which sells dollar bills for 75 cents each. IPO here I come!
    - biot 12y ago
      Or try the Groupon model: sell other peoples' dollar bills for 50 cents and give them 25 cents from the sale.
      - cperciva 12y ago
        ... and then come to Startup School and talk about how you hate people who run unsustainable businesses.
    - noir_lord 12y ago
      I would like to offer 100m for 1% and no board seat. I think my offer is tough but fair.

by pbreit 12y ago

ditonal 12y ago

First of all, limited VC involvement? They raised $122 million from VCs: https://www.crunchbase.com/organization/shopify https://www.crunchbase.com/organization/shopify These investors include VC firms like First Mark Capital, which are NYC based - and oh yeah, the exact same VC firm that was the biggest investor in the startup I worked at that I said is in freefall but now getting positive financial press. It's not about whether the VCs are running operations, it's about whether the VCs are worried they won't get their money back without an IPO, which seems like a genuine concern for an operation that's losing money. As to your second point of confusion, your pointing out its a Canadian company as if what I'm saying doesn't apply: "We qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to public companies in the United States. These provisions include:" They are IPOing on the NYSE so they are still regulated by the SEC, and if you actually read the filing you will note that they are using the new JOBS act in order to IPO. What I'm saying is not unrelated to anything, Shopify is one of the first companies to take advantage of these new changes in regulation. Maybe Shopify specifically isn't a shaky company, but I do think the doors have been opened for shaky companies without much scrutiny to be sold to a public that has been misled by PR.

pbreit 12y ago
Yeah, but they bootstrapped for 5 years and the same 3 funds anchored each round. They were fairly successful before taking any money. My bad. You gave the impression (to me, at least) that this was some sort of shaky, small situation when it was anything, but. If anything, there are way too few IPOs these days. The only people making money on new company creation are venture investors. Also, something like 85% of the IPOs in the last 2 years have used the new JOBS rules, so it's not really "one of the first". The threshold is $1b in revenues, after all, quite a rarity at the IPO stage.

cperciva 12y ago

Does $100M/year in revenue and $-25M/year in profits really make a company worth $1B these days?

pbreit 12y ago
Absolutely. $100m in revs is basically the magic number for $1b IPO. And a growth company should be "losing" money. Otherwise it's run out of ideas on how to make money which is a red flag.
- cperciva 12y ago
  I clearly need to abandon my profitable and steadily growing SaaS business and launch a startup which sells dollar bills for 75 cents each. IPO here I come!
  - biot 12y ago
    Or try the Groupon model: sell other peoples' dollar bills for 50 cents and give them 25 cents from the sale.
    - cperciva 12y ago
      ... and then come to Startup School and talk about how you hate people who run unsustainable businesses.
  - noir_lord 12y ago
    I would like to offer 100m for 1% and no board seat. I think my offer is tough but fair.