SAN FRANCISCO Online company SurveyMonkey said it aims to raise $800 million in a late-stage venture capital financing, one of the largest such deals in the Internet sector that underscores how many Silicon Valley firms are no longer in a rush to go public.
A listing was once seen as the pinnacle of success for an entrepreneur. But many firms reaching revenue and profitability benchmarks that would make them an IPO shoo-in can now tap the growing availability of late-stage cash and have also likely been put off by recent botched offerings.
"We're not saying we're never going public," said SurveyMonkey Chief Executive Dave Goldberg. "This was a better path for us, and it would save us some of the hassles of running a public company."
SurveyMonkey plans an equity and debt financing that will allow it to cash out early shareholders and investors and that will also bring in Google Inc as a new shareholder.
In contrast, many once high-flying companies that have gone public have fallen hard and failed to stage much of a recovery. Think daily-deals company Groupon Inc, which listed in late 2011 at $20 and is now trading around $5, or gaming company Zynga Inc, which listed in late 2011 at $10 and is now trading around $2.50.
Private equity companies are also investing in companies at earlier stages, and many venture capital firms that previously invested only at early stages are now making "growth" or later-stage investments.
In addition, more sovereign-wealth funds are funding late-stage private companies, as are some big mutual funds and wealthy individuals such as Russian billionaire Yuri Milner.
"There's so few awesome companies that can become iconic," said Brett Rochkind, a partner at General Atlantic, a growth-stage investment firm. For those that might, "there's a unlimited appetite for capital. Everyone's trying to get into those."
Companies that have raised outsized venture rounds in the last year or so include coupon company WhaleShark Media, which raised $150 million from Institutional Venture Partners and others in late 2011, and payments service Square, which received $200 million from Rizvi Traverse Management in September.
Document-storage company Dropbox raised $250 million from Index Ventures and others in late 2011 and microblogging service Twitter received $800 million from DST Global and others in late 2011.
Other companies note that they do not need an IPO to raise funds.
"For us, an IPO is not a strategy per se," said Jonathan Zabusky, chief executive of online food-ordering company Seamless.com. "Given we're a profitable company and have been for a long time, we do not need to use an IPO to raise money."
Existing profits are funding the New York-based company's rapid growth into more cities, Zabusky said.
Timing an IPO is definitely a tricky business and sometimes waiting may not be the answer.
Social network Facebook Inc's IPO came long after the point when many analysts thought it should tap public markets. The delay may have contributed to the troubled offering as many potential investors focused on its slowing growth rates. Facebook debuted at $38 in May, sank below $20, and is now trading in the low $30s. Facebook's chief operating officer, Sheryl Sandberg, is married to Goldberg.
SurveyMonkey's financing comprises a $444 million equity component, which will be led by Tiger Global Management, whose partner Lee Fixel will join SurveyMonkey's board of directors. It also includes $350 million in debt financing led by JP Morgan.
The funding round values SurveyMonkey at $1.35 billion. After the recapitalization, Goldberg said that the company's largest investors will be himself, Spectrum Equity and Tiger.
SurveyMonkey had revenue of $113 million and earnings before interest, depreciation, taxes and amortization of $61 million in 2012, he said.
SurveyMonkey was started in 1999. Goldberg, a former executive at the music division of Yahoo, became chief executive 10 years later.