SurveyMonkey's funding highights fading allure of IPOs

Thu Jan 17, 2013 6:50pm EST
 

By Sarah McBride

SAN FRANCISCO (Reuters) - 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" moment.

"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.   Continued...