Globally, $54.9B was raised in IPOs last year — the most since 2004 or earlier. With the increasing trends of Software-as-a-Service (Saas) and cloud computing, where does the software industry stand on Wall Street?
According to several 2012 – 2014 industry studies, it’s good news. In the United States alone, 222 companies held Initial Public Offerings in 2013 — 45 of those, or approximately one in five companies, were specifically related to technology or SaaS. That’s the third-highest number of IPOs in one year since the dot-com era.
Unfortunately, many tech companies fail the sustainability test shortly after going public and stocks can sharply fall (example: Zynga). However, a 2012 study showed that SaaS companies are the most stable/consistently profitable post-IPO compared to other technology companies. That’s surprising, considering that the average SaaS company is younger than the national average company age during IPO, at just 9.5 years old.
Just a few of the influential companies that contributed to last year’s valuation of over $173 billion in SaaS IPOs include marketing automation software company Marketo, online coupons and deal website RetailMeNot and zulily, an e-commerce company that sells clothes and goods targeted at families.
Where does 2014 stand for the success of SaaS IPOs? A variety of influential companies have already made announcements to go public — Box, a cloud-based file-sharing service, apparently filed for a secret IPO in January, as rival Dropbox continues to raise funds. A cloud-based advertising service provider called the Rubicon Project filed for an IPO in February for $100 million, and online coupon company Coupons.com filed for $100 million in January as their 2013 revenue rose 51 percent to $115 million.
With the success of long-lasting SaaS and cloud computing companies like Netflix, which opened in 2002 (now worth over $450 per share), it’s promising that the industry has a sustainable place on Wall Street. Inventus Capital Partners, an India-U.S. VC firm that invests primarily in cloud and SaaS companies, recently put together an infographic highlighting many of these stats and more — you can take a look at it here.
Zach Taiji is a writer and a public relations professional for Pulp-PR and River House Development. He has over four years of writing experience in technology, marketing, social media and Web design. His content has been published in Wired, PC Mag and 9to5mac.