By Sarah McBride
SAN FRANCISCO Jan 17 Online survey company
SurveyMonkey said on Thursday it has started an $800 million
recapitalization that will allow it to cash out early
shareholders and investors.
The financing underscores a trend in Silicon Valley to delay
initial public offerings long beyond the time a company reaches
revenue and profitability benchmarks that would have made it an
IPO shoo-in in years past.
"We're not saying we're never going public," said Dave
Goldberg, chief executive of SurveyMonkey, an online survey
company. "This was a better path for us, and it would save us
some of the hassles of running a public company."
It is a sentiment seemingly shared by many venture-backed
CEOs running companies that seem more than ripe for IPOs. While
an IPO was once seen as the pinnacle of success for an
entrepreneur, it has lost luster for many start-ups.
High-profile botched IPOs are contributing to the notion
that tapping public markets fails to mark a "we've made it"
"For us, an IPO is not a strategy per se," said Jonathan
Zabusy, chief executive of Seamless.com, an online food-ordering
company. "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, Zabusy said.
Social network Facebook delayed going public long
beyond the point when many analysts thought it should tap public
markets. The delay may have contributed to its troubled IPO, 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.
Even worse, other once high-flying companies have gone
public, fallen hard, and failed to stage much of a recovery.
Think daily-deals company Groupon, which listed in late
2011 at $20 and is now trading around $5, or gaming company
Zynga, which listed in late 2011 at $10 and is now
trading around $2.50.
Companies that have raised outsized venture rounds in the
last year or so include coupons company WhaleShark media, which
raised $150 million from Institutional Venture Partners and
others in late 2011; payments service Square, which received
$200 million from Rizvi Traverse Management in September; and
microblogging service Twitter, which received $800 million from
DST Global and others in late 2011.
In Twitter's case, $400 million went to buy out employees
and existing shareholders, rather than being invested back in
the company, in a situation paralleling SurveyMonkey.
SurveyMonkey's financing comprises a $444 million equity
component plus $350 million in debt financing. The equity is
being sold by existing SurveyMonkey shareholders, including
The equity tranche is led by Tiger Global Management, whose
partner Lee Fixel will join SurveyMonkey's board of directors.
Google is also participating, with its executive David
Lawee joining the board as an observer.
The funding round values the company at $1.35 billion. After
the recapitalization, Goldberg said that the company's largest
investors will be himself, Spectrum Equity and Tiger.
The company also expects to raise $350 million in debt
financing led by JP Morgan, Goldberg said.
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.