Backblaze IPO takes the opposite approach to Rivian and goes public on a small scale

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Gleb Budman, the co-founder and CEO of Backblaze, appeared in New York on November 11, 2021, to participate in the company’s debut on Nasdaq.

Source: Backblaze

Rivian Automotive, an electric car manufacturer with almost no revenue, raised nearly $12 billion in its initial public offering, and then watched its market value soar to more than $105 billion, surpassing Ford and General Motors all the way to make headlines this week.

At the other end of the IPO market, there is Backblaze, a cloud service for backing up data.

In an era of market debut followed by astronomical private financing rounds, Backblaze is a step backwards from the era when billion-dollar companies go public regularly to raise funds and build their image to win the trust of customers.

According to the company’s prospectus, in the year ended June 30, Backblaze’s revenue totaled US$59.9 million, and sales in the second quarter increased by approximately 17% to US$16.2 million.

Backblaze only raised $100 million in its offering, which is less than one-twentieth of the funds raised by companies such as GlobalFoundries, Robinhood, and Bumble this year. Backblaze’s stock price rose 24% when it debuted on Thursday and another 12% on Friday, raising the price to $22.31 and bringing the company’s market value to approximately $650 million.

There are more than 100 technology companies listed on the US exchange this year. According to peer standards, Backblaze is a micro-stock. At least 21 technology companies will make their debut in 2021, valued at more than US$10 billion. The value of Coinbase is more than 70 billion U.S. dollars, Roblox is more than 50 billion U.S. dollars, and Affirm is more than 40 billion U.S. dollars.

In the process of entering the publicly traded market, these companies often seek huge sums of funds from venture investors. Rivian raised $2.5 billion in financing before the IPO in July. In contrast, when Backblaze was founded in 2007 and issued a US$10 million convertible bond earlier this year, it raised less than US$3 million from outside investors.

Backblaze co-founder and CEO Gleb said: “Investors have seen this over and over again and said,’Wow, I don’t remember the last time I saw a company seeking access to the open market and only raised so little When is the funding,'” Badman gave an interview after the company went public on Thursday. “The fact that we were able to build the company to scale with such high capital efficiency surprised them.”

One of Backblaze’s competitors is Amazon, which is the fourth most valuable American company in the world. Amazon has been one of the greatest growth stories in 25 years, expanding from online booksellers to large e-commerce sites to full-stack technology platforms.

Amazon founder and CEO Jeff Bezos (Jeff Bezos)

Paul Sudds | Getty Images

But when Amazon went public in 1997, the company’s quarterly revenue was $16 million. Until about ten years ago, when the private equity market began to see a large number of new entrants, it was still common for technology companies to go public at a valuation of less than $1 billion.

There are other reasons for Backblaze executives to go public in a competitive market, which has the world’s largest cloud services from Amazon, Microsoft and Google. Backblaze currently stores 2 exabytes of data-or 2 million terabytes-and has 500,000 paying customers.

Budman said that the IPO provides a clear opportunity to disclose Backblaze’s books to customers and prove that it is mature enough to become a long-term technology provider.

He said that the new funds will help the company expand its sales team to deal with industry heavyweights. The B2 business, which competes with Amazon’s S3 cloud storage product, grew 61% in the second quarter.

“I actually hope that we will show mid-market companies that this is possible and open the way for more companies to do so,” Budman said. “In the past, other companies went public on other scales. I think people are already afraid of it, so the waiting time is getting longer and longer.”

watch: Confluent CEO Jay Kreps: Cloud services are a new way to deliver capabilities to companies


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