US$200M payday for Twilio

Other ‘unicorns’ are watching as Uber’s talk tech goes public

Jeff Lawson celebrated one of the biggest days of his life with a selfie. Standing atop the stage of America’s New York Stock Exchange, the founder of Twilio huddled with his wife to capture the moment the Silicon Valley startup became a public company.

Below, dozens of Twilio employees in red track jackets cheered and NYSE floor traders prepared to start taking orders for the company’s stock.

‘‘Yeah!’’ Lawson screamed as he rung the NYSE’S iconic opening bell.

Hundreds of companies go public each year, following the script of organised chaos that quickly enveloped Twilio’s initial public offering on Thursday.

But Twilio’s debut is being watched closely in both Silicon Valley and on Wall Street for whether the cloud software developer could help end a tech IPO drought that has troubled investors and regulators.

The 8-year-old company is the first of more than 150 technology companies valued at more than US$1 billion each by the private market – mainly venture capitalists – to go public this year.

These so-called unicorns have eschewed tradition by staying in private hands years after ballooning in value. That has contributed to what has become one of the worst years in IPO history since the financial crisis.

Just 41 companies have gone public so far this year, half as many as the same time last year and less than a third the number that made public debuts by this point in 2014, according to Dealogic, a research firm.

Twilio is helping ‘‘break the ice,’’ said Lise Buyer, an IPO consultant with Class V Group. ‘‘The deal got done matters.’’

An hour after ringing the opening bell, Lawson, Twilio’s chief executive, watched as investors began snapping up stock in his company for more than US$22 a share.

After months of preparations – detailed disclosures about the company’s operations to the Securities and Exchange Commission ran hundreds of pages – Twilio had thousands of new shareholders and was valued at more than US$2 billion.

The company raised US$150 million through the IPO, which it is expected to use to boost engineering and sales. (Lawson’s stake in the company is now valued at more than US$200M.) . . . that’s what

The San Francisco company has already attracted some of the biggest names in Silicon Valley, including Uber, which use the company’s software to communicate with their customers.

Its revenue has more than tripled over the past few years.

But as Twilio – pronounced Twill-ee-oh – has grown, so have its losses. Last year, Twilio reported a US$35M loss.

Still, Twilio received an upbeat reception on Wall Street, which may be encouraging for some tech companies, market analysts said.

The company’s stock closed at about US$28 a share Thursday, up 90 per cent from its opening price of US$15.

‘‘It is a very important data point for all the tech unicorns waiting in the wings,’’ said Kathleen Smith of Renaissance Capital, a manager of Ipo-focused exchange traded funds.

But it is unlikely to move large companies such as Uber, Airbnb and Snapchat, which are worth US$62B, US$25B and US$16B respectively, according to Fortune.

These companies can still raise money easily in the private markets, escaping the rigours – and headaches – of running a public company that must heed the calls of shareholders and government regulators.

Simply building the infrastructure needed to file quarterly earnings documents to the SEC can cost millions of dollars, market experts have said.

Pressed earlier this year on when ride-hailing company Uber would go public, Travis Kalanick, the company’s chief executive, balked. ‘‘I’m going to make sure it happens as late as possible,’’ Kalanick said on CNBC.

Over the past 18 months, Kalanick said, Uber has raised about US$10B. ‘‘We’re not in need of public capital,’’ he said.

But potential regulatory headaches and the demands of shareholders don’t appear to have phased Twilio’s Lawson.

‘‘Since the beginning we have been building this company for the long-term . . . . When you build a company that way, going public’’ makes sense, he said. When preparing to go public, ‘‘you run a tighter ship. The investment is worth it.’’