SurveyMonkey's funding highlights fading allure of IPOs

Thu Jan 17, 2013 11:38pm EST
 
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By Sarah McBride

SAN FRANCISCO (Reuters) - Online company SurveyMonkey said it aims to raise $800 million in a late-stage venture capital financing, one of the largest such deals in the Internet sector that underscores how many Silicon Valley firms are no longer in a rush to go public.

A listing was once seen as the pinnacle of success for an entrepreneur. But many firms reaching revenue and profitability benchmarks that would make them an IPO shoo-in can now tap the growing availability of late-stage cash and have also likely been put off by recent botched offerings.

"We're not saying we're never going public," said SurveyMonkey Chief Executive Dave Goldberg. "This was a better path for us, and it would save us some of the hassles of running a public company."

SurveyMonkey plans an equity and debt financing that will allow it to cash out early shareholders and investors and that will also bring in Google Inc as a new shareholder.

In contrast, many once high-flying companies that have gone public have fallen hard and failed to stage much of a recovery. Think daily-deals company Groupon Inc, which listed in late 2011 at $20 and is now trading around $5, or gaming company Zynga Inc, which listed in late 2011 at $10 and is now trading around $2.50.

Private equity companies are also investing in companies at earlier stages, and many venture capital firms that previously invested only at early stages are now making "growth" or later-stage investments.

In addition, more sovereign-wealth funds are funding late-stage private companies, as are some big mutual funds and wealthy individuals such as Russian billionaire Yuri Milner.

"There's so few awesome companies that can become iconic," said Brett Rochkind, a partner at General Atlantic, a growth-stage investment firm. For those that might, "there's a unlimited appetite for capital. Everyone's trying to get into those."   Continued...