IPOBoutique Brief 2.19.2015 – Massive VC Valuations Continue

A storyline that developed in December 2014 and has carried over into 2015 thus far is the massive valuations given in rounds of private funding to company’s who eventually intend on going public. We wrote about that issue in January but that same issue is rearing its head again.

On Tuesday, the Wall Street Journal reported that Pinterest is in talks to raise about $500 million to value the online-scrap-booking company at around $11 billion.  This came on the heels of Uber announcing expanded funding by $1 billion and SnapChat is said to seek a $19 billion valuation with a new round of funding. (Who’s laughing now about turning down $3 billion from Facebook) Bloomberg’s Leslie Picker says Chinese phone-maker Xiaomi is tops on the valuation list with a $46 billion valuation based on rounds of funding.

These company’s with eye-popping valuations could have fewer opportunities on the ‘long’ side of the trade says one hedge fund manager. VCs continue to inflate the valuation many months in advance of a potential IPO which puts extensive pressure on the company’s to continue growth at their tremendous rate.

Understandably, hedge funds want to be in closer to the ground floor when they believe a growth-technology company is on way to going public. Additionally, the appeal to capture the ‘teen’ market (Pinterest) with advertising or to be a part of a private company with such a high profile (Uber) is appealing, but where will the line eventually be drawn?

Cloudera: No Rush to IPO

Big data company, Cloudera, was heavily rumored to file the proper paperwork to go public in the early half of 2015, but those plans seem to have been put to rest. From Re/Code:

Cloudera founder and chief strategy officer Mike Olson put it simply in an interview with Re/code today: “We have no timeline for an IPO, period.” He declined to rule out whether Cloudera might complete its offering this year or wait until 2016. “We want to have the ability to do it when it makes sense,” he said.

Cloudera is doing just fine on cash as they raised $900 million last year to give themselves an implied valuation of more than $4 billion and recently issued a press release stating they topped $100 million in revenue in 2014.

So those VCs looking to cash out on Cloudera will have to wait a little bit longer.