Customer experience startup Sprinklr files confidential S-1 with SEC

Sprinklr, a New York-based customer experience company, announced today it has filed a confidential S-1 ahead of a possible IPO.

“Sprinklr today announced that it has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”) relating to the proposed initial public offering of its common stock,” the company said in a statement.

It also indicated that it will determine the exact number of shares and the price range at a later point after it receives approval from the SEC to go public.

The company most recently raised $200 million on a $2.7 billion valuation last year. It was its first fundraise in 4 years. At the time, founder and CEO Ragy Thomas said his company expected to end 2020 with $400 million in ARR, certainly a healthy number on which to embark as a public company.

He also said that Sprinklr’s next fundraise would be an IPO, making him true to his word. “I’ve been public about the pathway around this, and the path is that the next financial milestone will be an IPO,” he told me at the time of the $200 million round. He said that with COVID, it probably was a year or so away, but the timing appears to have sped up.

Sprinklr sees customer experience management as a natural extension of CRM, and as such a huge market potentially worth a $100 billion, according to Thomas. But he also admitted that he was up against some big competitors like Salesforce and Adobe, helping explain why he fundraised last year.

Sprinklr was founded in 2009 with a focus on social media listening, but it announced a hard push into customer experience in 2017 when it added marketing, advertising, research, customer and e-commerce to its social efforts.

The company has raised $585 million to-date, and has also been highly acquisitive buying 11 companies along the way as it added functionality to the base platform, according to Crunchbase data.

Longtime VC Todd Chaffee of IVP says late-stage scene is now ‘M&A world’

Todd Chaffee has long been one of the most senior members of the late-stage venture firm Institutional Venture Partners. Chaffee joined IVP in 2000 after logging six years at Visa, and went on to lead rounds in numerous prominent later-stage companies, many (but not all) of which have gone public, including Coinbase, Compass, Klarna, Kayak, Omniture, Pandora and Twitter.

It’s a good business to be in, particularly when companies are going public at that clip. Given that the IPO window is now shut indefinitely, we wondered what that might mean for the firm’s model.

Chaffee — who, like contemporary Bill Gurley, won’t be making new investments out of his firm’s next fund — talked with us about that question and what else the pandemic means to the venture industry and to him personally. Our chat has been edited for length and clarity.

TechCrunch: IVP last announced a fund in 2017. I assume one is coming soon that you cannot talk about — unless you can talk about it?

Todd Chaffee: Yeah, we’re currently investing Fund 16. That’s all I can tell you right now.

Do you think it’s time to bulk up even more, or size down? There’s maybe more opportunity but also check sizes are going to get smaller, seemingly.

Did unicorns like Lyft and Uber wait too long?

It was several years ago, at a tech conference in Laguna Beach, Ca., that the venture capitalist Bill Gurley issued one of what would become repeated warnings that startups were staying private too long. Comparing companies that refuse to go public to undergrads whose college careers extend several years past the point that they should, Gurley suggested they should be embarrassed, not proud, for keeping their shares in private hands. “Until you get liquid, you really haven’t accomplished anything,” Gurley said.

Whether Gurley was referring to Uber at the time, only he knows. Though this firm, Benchmark, eventually forced out Travis Kalanick, the cofounder and longtime CEO of Uber, the tipping point was seemingly not Kalanick’s determination to keep Uber privately held as long as possible but rather an investigation into sexual harassment investigations and the employee misconduct that was discovered in the process.

Either way, it’s looking increasingly like Gurley had a point. As you may have noticed if you care anything about the public markets, they took a nosedive today. In fact, they fell to new low for the year this afternoon, a reaction in part to the Federal Reserve’s decision earlier today to raise its benchmark overnight lending rate for the fourth time in 2018.

The Fed also signaled minimal rate hikes for next year — forecasting two rate hikes instead of three — but investors were apparently hoping for even better news.

It’s hard to blame them for seeking out more of a silver lining, given everything else that’s going on. Tech stocks are getting battered, with the FANG companies, Facebook, Apple, Netflix, and Google, down meaningfully from their share prices of six months ago. (Amazon has held up the best.) The economy of China —  the U.S.’s third largest export partner and its largest import partner —  is slowing sharply, which is expected to have an impact on the U.S. and the world economy. Add trade tensions into the mix, a sprinkling of uncertainty about regulations, a splash of a possible government shutdown, and the growing prospect that Donald Trump will be impeached, and you start to get the picture.

The market is scary suddenly, yet Uber and Lyft and Slack, among others, are now racing to dive into it. Why? Their venture backers will tell you it’s because the public markets recognize a strong growth company when they see it, and that each is finally positioned well to tell their story, aided by some dazzling metrics. But it seems just as likely that they see the window, which flew open this year, starting to swing back in the other direction. And if this month is any indicator, it could be hard to pry it open again, at least in the first quarter or two.

“The market is basically closed between now, and the start of a new year is always slow because companies don’t start roadshow [until the markets re-open],” says Kathleen Smith, a principal of Renaissance Capital and the manager of its IPO exchange traded fund. Pre-IPO companies like Uber are also waiting on their audits to close before they put any numbers in a public document, she notes. But it could be far from smooth sailing after that, suggests Smith. “In normal times, late, January and February and March become very active, but we aren’t in a typical market. I can predict from other times that we’ve seen a bear market like this that it will have an impact on IPO activity.”

It’s all part of a vicious cycle, Smith suggests. As public market shareholders begin to feel less affluent and more risk averse, they start redeeming their public market shares. That leaves fund managers who might otherwise gamble on new issuers with less capital to invest, and less flexibility. “Investors are just not going to want to take on any risk positions when market has [taken a turn for the worse],” says Smith.

If the markets are as crummy early next year as looks to be the case, it’s too bad, too sad for unicorn companies “They made choice to stay private and get capital,” says Smith. “I’ve stated many times that they should be getting while the getting is good. The pain can happen if money dries up, and it will dry up when the public market dries up.” 

That doesn’t mean the companies are doomed, of course, especially those that can show strong fundamentals.

For her part, Smith notes that what often happens in a downturn is for offerings to be heavily discounted. “Valuations will be chopped if the companies want investors to participate. They’ll have to be sure to make money.”

Even if they don’t get the prices that ambitious bankers might have discussed with them in recent months, they can always grow into the valuations their investors want to see. One need look no further than Facebook to remember why a bumpy offering doesn’t mean all that much longer term. “Just because a stock crashes below its IPO price isn’t a sign of a bubble,” says Pivotal Research analyst Brian Wieser. “You also have to keep in mind the dynamic of companies going public,” he says. “You expect IPOs to be overvalued. Investors in these companies are necessarily selling to the greatest fool.”

Still, there may be fewer fools willing to buy what they are selling than there might have been a year or two ago, and if those numbers really change, today’s unicorns will look like tomorrow’s donkeys. They’re certainly going to face more scrutiny than they might have had they moved sooner.

“Maybe we’ll roar into 2019 and all will be well,” says Lise Buyer, the founder of Class V Group, an advisory firm for IPOs. “But to the extent that investors will be more selective, they’ll look at path to profitability, and they’ll look at the valuations these companies took when they were private.” Then they’ll do their own math, suggests Buyer.

If the market is truly shifting, public market shareholders “won’t care what valuations companies achieved when they were private,” says Buyer. “They’ll only be willing to pay what they are willing to pay.”

Anaplan hits the ground running with strong stock market debut up over 42 percent

You might think that Anaplan CEO, Frank Calderoni would have had a few sleepless nights this week. His company picked a bad week to go public as market instability rocked tech stocks. Still he wasn’t worried, and today the company had by any measure a successful debut with the stock soaring up over 42 percent. As of 4 pm ET, it hit $24.18, up from the IPO price of $17. Not a bad way to launch your company.

Stock Chart: Yahoo Finance

“I feel good because it really shows the quality of the company, the business model that we have and how we’ve been able to build a growing successful business, and I think it provides us with a tremendous amount of opportunity going forward,” Calderoni told TechCrunch.

Calderoni joined the company a couple of years ago, and seemed to emerge from Silicon Valley central casting as former CFO at Red Hat and Cisco along with stints at IBM and SanDisk. He said he has often wished that there were a tool around like Anaplan when he was in charge of a several thousand person planning operation at Cisco. He indicated that while they were successful, it could have been even more so with a tool like Anaplan.

“The planning phase has not had much change in in several decades. I’ve been part of it and I’ve dealt with a lot of the pain. And so having something like Anaplan, I see it’s really being a disrupter in the planning space because of the breadth of the platform that we have. And then it goes across organizations to sales, supply chain, HR and finance, and as we say, really connects the data, the people and the plan to make for better decision making as a result of all that,” he said.

Calderoni describes Anaplan as a planning and data analysis tool. In his previous jobs he says that he spent a ton of time just gathering data and making sure they had the right data, but precious little time on analysis. In his view Anaplan, lets companies concentrate more on the crucial analysis phase.

“Anaplan allows customers to really spend their time on what I call forward planning where they can start to run different scenarios and be much more predictive, and hopefully be able to, as we’ve seen a lot of our customers do, forecast more accurately,” he said.

Anaplan was founded in 2006 and raised almost $300 million along the way. It achieved a lofty valuation of $1.5 billion in its last round, which was $60 million in 2017. The company has just under 1000 customers including Del Monte, VMware, Box and United.

Calderoni says although the company has 40 percent of its business outside the US, there are plenty of markets left to conquer and they hope to use today’s cash infusion in part to continue to expand into a worldwide company.

Lessons from cybersecurity exits

To: [email protected]

Subject: Lessons from cybersecurity exits

Dear F0und3r:

What a month this has been for cybersecurity! One unicorn IPO and two nice acquisitions – Zscaler’s great debut on wall street,  a $300 million acquisition of Evident.io by Palo Alto Networks and a $350 million acquisition of Phantom Cyber by Splunk has gotten all of us excited.

Word on the street is that in each of those exits, the founders took home ~30% to 40% of the proceeds. Which is not bad for ~ 4 /5 years of work. They can finally afford to buy two bedroom homes in Silicon Valley.

Evident.IO Investment Rounds and Return estimates

Date

Select Investors

Round Size

Pre

Post

Dilution

Estimated Returns / Multiple of Invested Capital

Sep 2013

True Ventures

$1.5m

$5.25m

$6.75 m

22%

44X

Nov 2014

Bain Capital

$9.8 m

$18.1m

$28.0 m

35%

10.7X

Apr 2016

Venrock

$15.7 m

$35.0 m

$50.7 m

30%

6X

Feb 2017

GV

$22.0 m

$73.6 m

$95.5

23%

3.1X

My math is not that good but looks like even some VCs made a decent return. Back of the envelope scribbles indicate that True Ventures scored an estimated ~44X multiple on its seed investment. Others like Bain snagged a ~10X on the A round investment and Venrock which led the Series B round took home ~6X.

We see a similar pattern with Phantom Cyber, which got acquired by Splunk for $350 million. A little bird told me that they had booking in the range of $10 million. But before we all get too self-congratulatory, lets ask – why did these companies sell at $300 million to $350 million when everyone in the valley wants to ride a unicorn? Clearly, funds like GV, Bain and Kleiner could have fueled more rounds to make unicorns out of Evident.io and Phantom Cyber.

Phantom Cyber Investment Rounds and Return estimates

Date

Select Investors

Round Size

Pre

Post

Dilution

Estimated Returns / Multiple of Invested Capital

April 2015

Foundation Capital

$2.7m

$8.3 m

$11.04 m

14.50%

31.7

Sep 2015

Blackstone

$6.5m

$26.7 m

$33.2 m

15.90%

10.5

Jan 2017

KPCB

$13.5m

$83.0 m

$96.5 m

13.90%

3.6

(Data Source: Pitchbook)

Some of the board members might have peeked at the exit data gathered by the hardworking analysts at Momentum Cyber, a cybersecurity advisory firm. Look at security exit trends from 2010-2017. You might notice that ~68% of security exits were below $100 million. And as much as 85% of exits occur below $300 million.

Agreed that there are very few exceptional security CEO’s like Jay Chaudhry who grew up in a Himalayan village, and led ZScaler to an IPO. This was Jay’s fifth startup and he kept over 25.5% of the proceeds, with another 28.3% owned by his trust. TPG Growth owned less than 10%. After all, he himself funded a substantial part of the company (which raised a total of $110 million).  But not everyone is as driven, successful and it’s ok to sell if the exit numbers are meaningful. Remember what that bard of avon once said:

For I must tell you friendly in your ear,

Sell when you can; you are not for all markets.

(Shakespeare, As you Like It, Act 3, Scene V)

(68% of security exits occur below $100 million. M & A Data from 2010-2017. Source: Momentum Cyber)

My friend Dino Boukouris, a director at Momentum Cyber, offers some sage advice to all founders who are smitten by unicorns. “Before a founder raises their next round, I would reflect on the market’s ability to purchase companies. The exit data says it all. As you raise more capital, your exit value goes up, timing gets stretched and the number of buyers who can afford you drops.” Dino has a point, you see. As we inflate valuations, your work, my dear CEO, becomes much harder.

If you don’t believe Dino, let’s look at another recent exit, PhishMe, which was acquired by a private equity consortium for $400 million. That’s a nice number, correct? At the first look, you’ll notice that the dilution and financial return patterns are similar to that of Phantom. Except that PhishMe took 7 years and consumed $58 million of capital, while Phantom took 3 years and consumed $22.7 million. Timing and capital efficiency matter as much as exit value. It’s not just the exit value ~ but how long and how much. Back to my man, Dino who will gently remind you that for the 175 M & A transactions in 2017, the median value was $68 milion. Read that last sentence again — very slowly. $68 million. Ouch!

PhishMe Investment Rounds

Date

Round size

Select Investors

Pre-money Valuation

Post

Dilution

Returns / Multiple of Invested Capital

July 2012

$2.5m

Paladin

$10 m

12.5 m

12.20%

32.0

March 2015

$13 m

Paladin

$61 m

$74 m

13 %

5.4

July 2016

$42.5 m

Bessemer

$155 m

197 m

21%

2.0

(Data Source: Pitchbook)

Two years ago  in Cockroaches versus Unicorns – The Golden Age of Cybersecurity Startups cybersecurity founders were urged to avoid the unicorn hubris. A lot of bystanders, your ego included, will cheer you as you get higher valuations. But aren’t we all rational human beings, always making data based decisions?

Marc Andreessen will remind you that his best friend, Jim Barksdale, once said “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.”   Since 2012, my VC friends have funded 1242 cybersecurity companies, investing a whopping $17.8bn. But chief information security officers say that they don’t need 1242 security products. One exhausted CISO told me they get fifteen to seventeen cold calls a day. They hide away from LinkedIn, being bombarded relentlessly.

Enrique Salem (former CEO of Symantec) and Noah Carr, both with Bain Capital are celebrating the successful sale of Evident.io. They pointed out that the founders — Tim Prendergast and Justin Lundy had lived the public cloud security problem in their previous lives at Adobe. “Such deep domain expertise allowed them to gain credibility in the market. It’s not easy to earn the trust of their customers. But given their strong engineering team, they were able to build an “easy to deploy” solution that could scale to customers with 1000s of AWS / Azure accounts. Customers were more willing to be reference-able, given this aligned relationship.”

(Source: Momentum Cyber)

You, my dear CEO, should take a page from that playbook. Because Jake Flomenberg, Partner at Accel Partners says, “CISOs are suffering from indigestion. They are looking to rationalize toolsets and add very selectively. New layer X for new threat vector Y is an increasingly tough sell.” According to Cack Wilhelm Partner at Accomplice, “Security analysts have alert fatigue, and CISOs have vendor fatigue.”  You are one of those possibly, wouldn’t you agree?

Besides indigestion and fatigue, the CISO roles have become demanding. William Lin, Principal at Trident Capital Cyber, a $300m fund pointed out that “the role of CISO has bifurcated into managing risk akin to an auditor and at the same time, managing complex engineering and technology environments.”  So naturally, they are managing their time more cautiously and not looking forward to meeting one more startup.

Erik Bloch, Director of Security Products at SalesForce says that while he keeps an open mind and is willing to look at innovative startups, it takes him weeks to arrange calls with the right people, and months to scope a POC. And let’s not forget the mountain of paperworks and legal agreements. “It’s great to say you have a Fortune 100 as an early customer, but just be warned that it’ll be a long, hard road to get there, so plan appropriately” he pointed out.

So, my dear founder, as the road gets harder, funding slows down. Look at 2017 —  despite all those big hacks, Series A funding dropped by 25% in 2017. Clearly, many of our seed funded companies are not delivering those Fortune 100 POC milestones. And are unable to raise a Series A.  Weep, if we must, but let us remind ourselves that out point solutions are not that impressive to the CISOs.

All the founders I know are trying to raise a formulaic $8m Series A on $40m pre. But not every startup that wants 8 on 40 deserves it. Revenues and growth rate, those quaint metrics matter more than ever. And some investors look for the quality of your customers.  Aaron Jacobson of NEA, a multi-billion dollar venture fund says, ”A key value driver is a thought-leader CISO as a customer. This is often a good indicator of value creation.“

Stage

Expected Revenue Run Rate

Estd. Round Size

Angel

None

Up to $2m

Series A

$1.5m to $3 m

$5m to $8m

Early VC

$5 m to $8 m

$15m to $25m

Late Stage VC

$6m to $10m

$30m to $50m

When markets get crowded and all startups sound the same, investors seek quality, or move to later stages.  They like to see well proven companies, that have solved a lot of basic problems. And eliminated riskier stumbling blocks. Like product-market fit, pricing and go-to-market issues. Naturally, the later stage valuations are rising faster. Money is chasing quality, growth and returns.

Median Post-Money Valuation by stage for cybersecurity companies (Source: Pitchbook)

The security IPOs offer a sobering view. This is a long journey, not for the faint of heart. Okta moved fast, consumed ~4X more capital as compared to Sailpoint and delivered great returns.

Company

Year Founded

Years to IPO

Total Capital raised prior to IPO

Revenues (2017)

Post Money of last round prior to IPO

Market Cap at IPO

ZScaler

2008

10

$180m

$176 m

$1.05 bn

$3.6 bn

Okta

2009

8

$231 m

$160 m

$1.18 bn

$2.1 bn

Forescout

2000

17

$159 m

$220 m

$1.0 bn

$806 mn

SailPoint

2004

13

$54.7 m

$186 m

N/A

$1.1 bn

Security IPOs (Source: Momentum Cyber, Pitchbook)

Innovating with go-to-market strategies

In the near term,  the big challenge for you, dear security founder, is selling in an over crowded market. If I were you, I’d remember that innovation should not be restricted to merely technology, but can extend into sales and marketing. We lack creativity when it comes to marketing – ask Kelly Shortridge of Security ScoreCard. She should get some kind of BlackHat award for developing this godforsaken Infosec Startup Bingo. If you find any startup vendor that uses all these words, and wins this bingo, please DM me ~ I will promptly shave my head in shame. We got here because we do not possess simple marketing muscles. We copy each other while our customers roll their eyes when we pitch them.

Sid Trivedi of Omidyar Technology Ventures wants to work with the developer focussed startups. He says, “Look at companies like Auth0. The sales efficiency on developer-focused platforms is tremendous. You can go to a CISO, CIO or CTO and point out that X number of developers are paying to use my technology. Here are their names, why don’t you talk to them? And then, let’s discuss an enterprise license for the full company?” That approach works like magic. Overwhelming majority of the software IPOs like Twilio, Mulesoft, SendGrid are developer platforms.”

If you go top-down in a hurry, you can crash and burn. I am aware of an impatient security vendor who used executive level pressure at a Fortune 50 company. They kicked their way into the POC. And got kicked out by the infosec team. The furios infosec team destroyed the vendor in a technical assessment. I was told that the product was functional but the vendor’s impatience and political gymnastics killed the deal. Let us not forget simple truth: many times CISOs turn to their subordinates for advice and decision-making, so don’t just sell to the top. Nor ignore the rest of the people in the room.

With more noise, the buyers freeze. Margins shrink. Revenues and growth slows down. Which means it’s harder to get to your milestones before your next round. Running out of cash is not fun. Nor is a down round, layoffs and such. So while this is easier said than done, please raise less and do more. And maybe, just maybe, you can keep 40% of a $350 million exit.

If you have questions or existential dilemmas, you can always find me, chatting with a friendly VC in South Park.  Or I’m always around in a trusted secure world of Signal.

Stay safe at that annual security stampede called RSA.

Kindly,

Mahendra

PS: Let’s not forget to express our gratitude to those analysts at Momentum Cyber and Pitchbook for painstakingly tracking every investment, analyzing and presenting meaningful data. They help us look at the forest, and make our journey easier. Send them a thank-you tweet, some wine, chocolates, flowers or home-baked cookies.

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IPOs are back, but for how long?

The first quarter is almost over, and despite Dropbox’s splashy debut on the public market earlier today, it was preceded by just two other U.S. tech companies to IPO in 2018: Cardlytics and Zscaler. 

Will Dropbox turn things around? Will the fact that Spotify is readying its debut get the momentum going at long last?

It all depends on how Dropbox and Spotify perform and how they impact what’s known as the IPO window. When new issuers perform well, it typically swings wide open. When they don’t, well, it gets slammed shut.

At this point, it’s been four years since we had an IPO window big enough for a stream of companies to pass through. In 2013, 50 tech companies went public. In 2014, the number was 62. Things grew chillier after that, with just 31, 26 and 27 companies getting out the window in 2015, 2016 and 2017, respectively.

Why haven’t things warmed up again, particularly with a stunning 171 venture-backed “unicorns” waiting in the wings?

Some high-profile flops are one large factor. Last year, venture-backed darlings like Blue Apron and Snapchat braved the public markets, but it was public shareholders who had to keep a stiff upper lip as their shares abruptly sputtered. These kinds of scenarios can seriously spook pipeline companies and their advisors, particularly in the world of consumer tech.

The availability of late-stage capital is also making it far easier to stay private longer. With SoftBank’s $100 billion Vision Fund writing enormous checks to growth startups — and traditional venture funds reacting by raising their own gigantic venture funds — this trend is only expected to continue.

There are also plenty of sky-high valuations to consider. Startups were able to command numbers that weren’t necessarily tied to reality in 2014 to 2015. That makes the prospect of a public offering, at a potentially much smaller valuation, something to be put off as long as possible.

Still, IPO insiders think things shifted once again — that a growing number of companies will have the wind at their backs in 2018. They point to strong signals like Zscaler doubling on its first day of trading and Dropbox pricing above its IPO range as favorable signs of what’s to come. Indeed, they say that behind the scenes, a lot of prep work has already set the stage.

“The number of tech companies, across the spectrum, now meeting with (if not engaging) bankers and working with the auditors to be ‘IPO ready’ is very definitely on the upswing,” says Lise Buyer, an IPO consultant and partner at Class V Group. The “window is already wide open, and there is enormous pent-up demand at institutions for new companies that are priced reasonably.”

John Tuttle, global head of listings at the New York Stock Exchange, similarly says he expects “a strong year if market conditions hold constant.” He characterizes the pipeline for technology offerings as “strong,” particularly enterprise technology companies.

Tuttle also notes the growing number of far-flung tech companies looking to list their share in the U.S. Among these are three China-based companies with plans to raise hundreds of millions of dollars by selling American depositary shares in the not-too-distant future, including Bilibili, a nine-year-old, Shanghai, China-based anime video sharing platform; iQiyi, an eight-year-old Beijing-based video streaming service; and OneSmart, a 10-year-old, Shanghai, China-based K-12 after-school education provider.

Hardware-maker Xiaomi is expecting to stage a public offering both in the U.S. and in Hong Kong this year, too.

That’s saying nothing of the Canadian and Latin American companies that are offering shares to U.S. investors. Among them: Brazil’s payments business PagSeguro Digital; it went pubic in January on the NYSE.

So who’s next? Following Dropbox and Spotify, Zuora, the 11-year-old, cloud subscription management platform, has finally filed to go public. Another company to just file is Pivotal Software, a spinoff of EMC and VMware. DocuSign is on file confidentially. We’re also hearing that quite a few other enterprise technology companies are gearing up to go public.

Just don’t expect to see big consumer tech companies like Airbnb, Uber and Pinterest listing in 2018. A lot of these decacorns” are planning to debut next year at the earliest, partly because they’ve raised enough money that they can’t afford to make mistakes at this point.

They’ve raised enough money that they can wait, too. That means the rest of us will have to wait alongside them.

 

Enterprise subscription services provider Zuora has filed for an IPO

Zuora, which helps businesses handle subscription billing and forecasting, filed for an initial public offering this afternoon following on the heels of Dropbox’s filing earlier this month.

Zuora’s IPO may signal that Dropbox going public, and seeing a price range that while under its previous valuation seems relatively reasonable, may open the door for coming enterprise initial public offerings. Cloud security company Zscaler also made its debut earlier this week, with the stock doubling once it began trading on the Nasdaq. Zuora will list on the New York Stock Exchange under the ticker “ZUO.” Zuora CEO Tien Tzuo told The Information in October last year that it expected to go public this year.

Zuora’s numbers show some revenue growth, with its subscriptions services continue to grow. But its losses are a bit all over the place. While the costs for its subscription revenues is trending up, the costs for its professional services are also increasing dramatically, going from $6.2 million in Q4 2016 to $15.6 million in Q4 2017. The company had nearly $50 million in overall revenue in the fourth quarter last year, up from $30 million in Q4 2016.

But, as we can see, Zuora’s “professional services” revenue is an increasing share of the pie. In Q1 2016, professional services only amounted to 22% of Zuora’s revenue, and it’s up to 31% in the fourth quarter last year. It also accounts for a bigger share of Zuora’s costs of revenue, but it’s an area that it appears to be investing more.

Zuora’s core business revolves around helping companies with subscription businesses — like, say, Dropbox — better track their metrics like recurring revenue and retention rates. Zuora is riding a wave of enterprise companies finding traction within smaller teams as a free product and then graduating them into a subscription product as more and more people get on board. Eventually those companies hope to have a formal relationship with the company at a CIO level, and Zuora would hopefully grow up along with them.

Snap effectively opened the so-called “IPO window” in March last year, but both high-profile consumer IPOs — Blue Apron and Snap — have had significant issues since going public. While both consumer companies, it did spark a wave of enterprise IPOs looking to get out the door like Okta, Cardlytics, SailPoint and Aquantia. There have been other consumer IPOs like Stitch Fix, but for many firms, enterprise IPOs serve as the kinds of consistent returns with predictable revenue growth as they eventually march toward an IPO.

The filing says it will raise up to $100 million, but you can usually ignore that as it’s a placeholder. Zuora last raised $115 million in 2015, and was PitchBook data pegged the valuation at around $740 million, according to the Silicon Valley Business Journal. Benchmark Capital and Shasta Ventures are two big investors in the company, with Benchmark still owning around 11.1% of the company and Shasta Ventures owning 6.5%. CEO Tien Tzuo owns 10.2% of the company.

PE/VC Backed IPO: Newgen Software

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