How to succeed when going public: The Slack case

How to succeed when going public: The Slack case 

The company specialized in improving communication and collaboration between teams, successfully debuts at the NYSE 

On June 20, Slack made its debut on the New York parquet floor. It’s the debut generated a great expectation in the equity market due to several reasons: 

  • The company’s value was set at $13.132 billion, above the $7.1 billion value they had in the last round with VCs (Venture Capital).  
  • After  the IPOs of Uber and Lyft, there was a certain degree of skepticism among the investment community. 
  • The company opted for a DPO (or direct listing) format for its market entry, following with the Spotify format  .    

Unlike the two big American VTC platforms, Slack’s shares debuted on the market with a rise of almost 40%. More importantly, its shares remained stable throughout the following week at around $38. This validates the market entry format chosen by the company’s managers.   

Private investment 

As is often the case in this type of company, private investors are those who have most benefited from the valuation achieved by Slack on its market launch. They trusted the benefits of its business model from its earliest stages. For example, Accel, the American VC that has supported Slack’s founders since 2009. It subscribed a round of $1.5 million (yes, you read right… a million and a half!) and whose 23.8% stake is currently worth $4.5 billion.  

Source: Pitchbook 

Profitability VS Risk 

Two conclusions can be drawn from Slack’s IPO: 

  1. The profit-risk binomial for an investor in the capital of a company is maximized generally in the phases prior to its incorporation into the stock market (pre-market environment). Until some years ago, live private investment was limited to FFFs (Family, Friends & Fools) and other professional (or qualified) investors such as Business Angels, Venture Capital and Private Equity. The Equity Crowdfunding, regulated in our country since April 2015, has come to allow the private investor (unqualified) to access private investment in the earliest stages of the growth curve of companies.  
  2. If the company’s main priority is not to obtain new capital (Uber vs Spotify), DPO will be a cheaper, faster and more transparent format for companies to enter the stock market. This format is especially suitable for smaller companies, which can access unregulated markets, such as MAB or Euronext. It validates their valuation and encourages them to professionalize and make their management transparent. All this without the need to engage in the greater complexity of an IPO through a capital increase aimed at both existing and new shareholders.  

Fellow Funders allows private and professional investors to invest in growth projects of companies through its online platform, both in early stages (start-ups) and in their expansion stages. It also gives access to their capital to new investors and their most direct stakeholders (employees, customers, suppliers, etc.). In addition, through PMS Advisory we facilitate the incorporation of these companies into alternative markets and investors give an opportunity to monetize their investment. 

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