Will Zendesk's Successful IPO Start a Trend Among Tech Cos.?
May 16, 2014
Trading under the symbol ZEN, Zendesk has hit the NYSE, its $9 IPO share price square in the middle of its initial estimated range. Prior to the offering, the cloud-based help desk company had raised about $72 million through equity financings since 2008. Its revenues were up to $72 million in 2013 but it still reported a net loss of $23 million for the year. Stockholders prior to the IPO included Charles River Ventures (23.8% pre-IPO stake), Benchmark Capital (18.2%) and Matrix Partners (8.5%), among others. Zendesk ended its first day of trading at $13.43, up 49%.
Zendesk's IPO comes during a time when tech companies have been reluctant to hit the public markets. In this regard, the company took quite a risk in its going public. As we previously covered on the PitchBook Blog, biotech companies have been the ones dominating the VC IPO landscape as of late, while many tech companies have found other means of raising capital (through massive private financings, for instance). In the current rocky IPO environment for tech companies, those that have been reluctant to go public will without question be watching Zendesk's performance very closely. Companies like Dropbox, Box and Cloudera have been rumored to be preparing for IPOs for quite some time now, likely just waiting for conditions to be favorable. Well, if Zendesk's first day of trading is any indication, we may just see the floodgates open up for other tech companies to finally start going public.