Amplitude begins direct listing on NASDAQ

Read Time:5 Minute, 30 Second


After the opening bell was sounded at the Nasdaq headquarters in New York on Tuesday, September 28, 2021, Amplitude CEO Spenser Skates was in Times Square.

Andrew Kelly | Associated Press

Like Benchmark’s Bill Gurley, he expressed his right Direct listing In terms of initial public offerings, his venture capital firm has had limited success in getting its portfolio companies to choose this route to the public market.

This may start to change.On Tuesday, analytics software vendors amplitude It made its debut on Nasdaq through a direct listing. The company did not raise new funds at a discount, but allowed existing investors to sell shares at market clearing prices.

Amplitude is just the second directly listed company in Benchmark’s portfolio. Posture, A leading collaborative software company Facebook Co-founder Dustin Moskowitz is First a year ago.

“I think we will see more transactions in our portfolio, and more generally,” said Eric Vishria, a partner at Benchmark and a member of the Amplitude board of directors.

Amplitude stock opened at $50, then rose more than 9% to close at $54.80, giving the company a market value of approximately $7.1 billion on a fully diluted basis. Benchmark, the largest investor, owns 15% of the company’s shares, with shares valued at more than $835 million at the close.

The direct listing trend starts with music streaming apps Spotify In 2018. Slack followed closely in 2019, and Palantir And Asana are prominent characters in 2020.This year, there have been at least six direct listings, including Coin Bank with Rob Rox, And the optical company Warby Parker It will also be listed directly this week.

Gurley on TV, Twitter and His own blog, Believes that the IPO process is permanently destroyed, which is equivalent to handing over cheap stocks from the company to Wall Street. He reiterated this view in an interview with CNBC’s “Squawk Box” on Tuesday.

“As I have mentioned many times before, the traditional IPO process has been transformed into this process, during which huge one-day profits are transferred from investment banks to their trading customers,” Gurley said. “There is a modern way to do this. You can actually use supply and demand to determine prices and allocations, and that’s the role of direct listing.”

Early pivot

Amplitude was originally called Sonalight. In 2012, the founders showed off their products on the Y Combinator demo day. They are launching a Siri-like application for Android phones, allowing users to send text messages by voice.

The Sonalight team also built software to observe how people use their applications.According to reports, other start-ups have expressed interest in the technology TechCrunchAnyone who follows the early days of Slack will be familiar with this narrative, which was originally created as an internal messaging tool for startups. Focus on developing online games.

Sonalight gave birth to Amplitude. The founder passed Y Combinator for the second time in 2014 and won a Vishria check at Benchmark.

Vishria described Amplitude as the “money ball” for product development, citing Michael Lewis’ 2003 book on Oakland A general manager Billy Bean and his use of unconventional statistics to build the best baseball team within budget.

Amplitude CEO Spenser Skates and co-founders Curtis Liu and Jeffrey Wang focus on improving the application or website by measuring the activities of each step so that the product team can make adjustments that may produce more desirable results.

Over time, Amplitude became a tool for all parts of the company’s operations, such as marketing and support. Disney with Walmart As a customer, even if Amplitude has to compete with heavyweight analysis software Adobe with Google.

Like software companies in Silicon Valley, Amplitude encountered terrible obstacles at the beginning of the pandemic last year because the company quickly cut its spending.According to Amplitude, costs have increased and revenue growth has not kept up Prospectus.

Benchmark’s advice is to prepare for various scenarios.

“One thing we didn’t plan in the initial stage was,’Gosh, this will totally increase the importance of numbers,'” Vishria said. “Everything will really accelerate.”

Revenue in 2020 will eventually increase by 50% over the previous year, reaching 102.5 million U.S. dollars, and the company’s net loss has narrowed. Growth accelerated this year, with revenue in the second quarter rising 66% to $39.3 million.

‘It’s not just making up something’

Skates began considering a direct listing in 2019, around the time Gurley began publicly advocating the company’s choice of this option.

Skates participated in an event organized by Gurley In San Francisco, To educate venture capitalists and founders on the mechanisms and benefits of direct listing.

“I think many of the qualities or features or characteristics of direct listing really attracted him,” Vishria said of Skates. “I found a lot of technical engineering founders, they like the kind of clean things. The stock will open, we will match the trading, we will get a fair price. You are not just making up something.”

After the event, Skates studied the process and discussed it with other board members. He said that there is no general consensus, but they all said they would support him either way.

Neeraj Agrawal, a director of Battery Ventures, said he supports the IPO cut, Nutanix And others. But in the end, Agrawal found that long-term shareholders would not make a major difference, and appreciated the low dilution of existing supporters.

“For us, what is really clear is that IPOs have traditionally underestimated the company’s price, not a little, a lot-hundreds of millions of dollars on average,” Skates said. “As the trustee of our existing shareholders, giving them a bad deal is totally unacceptable.”

Agrawal called it “a watershed moment for direct listing in Minecraft.”

Earlier this year, Amplitude did sell some shares at a price equivalent to an IPO discount. Starting in May, the company improve 200 million U.S. dollars to sell shares at a price of 32.02 U.S. dollars per share. As of Tuesday’s close, buyers including Sequoia and Batteries had risen 71% in just a few months.

But one of the main benefits of a direct listing is that existing shareholders, especially employees, will not be locked in and can start selling shares immediately instead of watching the company hand over shares to new investors who can trade immediately.

“Public market funds-they don’t need money. They are the richest people in the world,” Skates said. “They will be fine. You need to give it to your shareholders.”

watch: Bill Gurley praised raising funds through a direct listing

Happy
Happy
0 %
Sad
Sad
0 %
Excited
Excited
0 %
Sleepy
Sleepy
0 %
Angry
Angry
0 %
Surprise
Surprise
0 %