Regional entrepreneurs packed the latest MIT Enterprise Forum of the Coast on March 16 to hear advice about initial public offerings.
Lise Buyer, principal of Portola Valley-based Class V Group, served as the keynote speaker. Also on the panel were AppFolio Chief Financial Officer Ida Kane, Inogen CFO Ali Bauerlein and Rincon Venture Partners Managing Director Jim Andelman.
Buyer has a long track record of taking companies public and she helped with Google’s IPO, among others. She noted that so far no companies have gone public in 2016 even though 27 went public in 2015.
In the recent market downturn, markets have become riskier. So, fewer IPOs are happening simply because IPOs are risky investments.
“Typical IPO investors are institutional investors,” Buyer said. “They wake up in the morning and just don’t want to lose money. When things are rugged, you just don’t want to have negative results.”
Buyer also said companies can sometimes go public to establish a market value for shares in their company and use stock as a form of currency.
Bankers used to tell companies to go public only if they had more than $100 million in sales, Bauerlein said. That started to change around 2013 when Inogen, a Goleta-based manufacturer of direct-to-consumer portable oxygen concentrators, first explored going public.
Inogen went public in February 2014 and Bauerlein said the company did so partly to avoid being acquired by another company.
Kane also said AppFolio decided to go public in June 2015, even though it had revenues of only about $60 million. Going public has benefits, Kane said, but it also brings a lot of scrutiny.
Kane said the company intentionally gives very little financial guidance, even though analysts hate the lack of information.
“As many times as you give your formal position on something, people forget,” Kane said. “We give very little guidance, but we’ve been very firm with our investors and analysts from the beginning as to what we are going to give.”
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