* Jive Software, Trustwave, Brightcove among possible IPOs
* Social media driving interests
* U.S. IPO activity tops $12.5 bln, highest since 2000
By Nadia Damouni
NEW YORK, March 11 As investors impatiently
await initial public offerings from LinkedIn, Groupon, Facebook
and other hot Web start-ups, some lesser-known software
technology companies are quietly positioning themselves to tap
the public markets this year.
Companies such as Jive Software, Trustwave and Brightcove
may not be household names, but their growth rates have soared
over the last few years, paving the way to a possible public
markets exit over the next few months, several people close to
the discussions have said.
"Companies that focus on areas like social networking,
cloud, virtualization, online content distribution and storage
will be the leaders in attracting both public and strategic
investor attention," said one top New York financial adviser,
who focuses on technology.
With interest rates low, investors are willing to take more
risk for the chance to earn higher returns.
The U.S. IPO market so far this year has raised $12.5
billion, six times what it had raised by this time last year,
and the highest amount since 2000, according to Thomson Reuters
Some of the software IPO candidates are piggy-backing on
the social media craze, by building their own technology
platforms to connect people. One example is Service-now.com,
which has publicly said it takes its inspiration from Facebook
and Twitter by becoming a new kind of social information
Service-now.com has more than doubled its revenue each year
since its inception in 2004, CEO and founder Fred Luddy said.
The company focuses on providing tech support through chat
forums and live feeds to customers.
Luddy, who disclosed that its annual recurring revenue is
approaching $100 million on improving operating margins, said,
"In the coming years we aspire to pass a billion dollars per
year in revenue."
Two sources with direct knowledge of the company's plan
said Service-now.com is considered to be in the sweet spot of
companies that will likely file to go public this year due to
its exponential growth and revenues. The company took $7.5
million from JMI Equity in its first couple of years, but its
strong growth has precluded the need to seek additional company
funding, the CEO said.
In 2009, Sequoia Capital purchased shares from employees
but none of this investment went to the company. "Our
incredible momentum could carry the company through an IPO and
we'll certainly entertain the idea when the time is right,"
Another social business software company expected to go
public this year is Jive Software, said two sources familiar
with the discussions. All sources declined to be identified
because they were not authorized to speak with the media.
Founded in 2001, Jive's CFO Bryan LeBlanc told Reuters on
Thursday that the IPO market is hot right now and that his firm
is watching the trend closely.
"We have not made concrete plans yet, we continue to
evaluate all of our liquidity options but we recognize that
being a public company gives you access to investments and
access to capital to increase innovation and growth," LeBlanc
Although LeBlanc would not disclose the company's current
revenues, Jive has completed three rounds of financing since
2007, totaling $57.7 million. Venture capital firms Sequoia
Capital and Kleiner Perkins teamed up on the last round of
financing to raise $30 million, marking the largest investment
together since 1999, when they bought a combined $25 million
stake in Google. This was five years before the search engine
sold shares to the public.
Palo Alto Networks, the security software company, was also
expected to be one of the hottest IPOs of 2011 until the
company's CEO Lane Boss resigned in December, said two sources
familiar with the situation.
With a potential multibillion-dollar offering, the
Sunnyvale, California company had yet to sign up bookrunners to
take it public, the sources said. A new CEO could be announced
over the next few weeks, providing a good chance for an IPO
later this year, said one of the sources.
Also in the data security market is fast-growing
Chicago-based technology company Trustwave. The company has
lined up its financial advisers to go public this year, which
remain undisclosed, said several sources familiar with the
TrustWave had been solely funded by founders and angel
investors prior to its first round of funding by FTVentures in
2004. The company has reportedly surpassed the $100 million
revenue benchmark of companies ready to enter the public
Another pressing IPO for 2011 is online video platform
Brightcove, which has been eagerly expected to file for at
least a year. The company is currently entertaining discussions
from bankers over IPO strategies for 2011, said the sources.
A later year IPO could come from webcasting company On24,
based in San Francisco, the sources said. After the March
quarter the company is likely to pick a financial team to lead
its offering, these sources said.
Trustwave declined to comment. Brightcove, Palo Alto
Networks and On24 were not immediately reachable.
(Reporting by Nadia Damouni; Editing by Kenneth Li, Gary