So much for that IPO, I suppose. Good Technology, a long-time IPO candidate with reams of public financial data, was snapped up by BlackBerry this morning..

Source: techcrunch.com

An excellent analysis from Alex Wihelm (TechCrunch) about the acquisition of Good by Blackberry. I was very surprised to see that Good was acquired for $425m (having raised more than $300m).

My reasoning for Good was as follows:

– Blackberry was the dominant player in the market for corporate emails

– With Blackberry losing huge market share, corporate clients focusing on costs (Bring your own device), the ubiquity of corporate email, Good was ideally positioned as leader of email solutions.
– And with healthy revenue growth, Good should have been able to raise money or go to IPO.

This didn’t pan out as expected, with an acquisition cost that seems disappointing (it doesn’t mean however that investors lost money, it depends on the terms of the pref shares). And this is very strange, because 1) a market leader in 2) a huge market with 3) good revenue growth should have been able to raise at huge valuations.

This, together with quite a few other examples, makes me wonder:

– Are we starting to see much more focus on revenues and (horror!) profits for startups? In other words, are we seeing the end of (some) crazy valuations?

– Can startups stay indefinitely private, without going to IPOs? Can VCs keep accounting in “mark-to-market” terms without a real cash exit?

– Many of the Unicorns had the choice to go to IPO or stay private – is it still the case? Can these startups actually access the public market today?

Or I might be totally wrong, and Good is an anomaly. But there are definitely some signs which are disturbing…

 

UPDATE 10 SEPTEMBER: just saw this very good article from Marketwatch with more information about Good’s valuation. It was apparently valued at $1bn in 2013, so was definitely sold at a huge discount of more than 50%. (Again, that doesn’t say anything about the returns of VCs who might have had liquidation preferences, but still…)

 

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