It’s been a difficult few years for investors looking to invest in the newest generation of tech companies. Venture capital has been plentiful and many of them have been close enough to profitable that they don’t need to seek out Wall Street financing. They also don’t want the headaches that come with being publicly traded.
This could be changing, at least for a couple of tech giants.
The first is Dropbox, which is in talks with advisors about a possible 2017 IPO. At this point, according to reports, the talks are preliminary and management just wants to gauge potential market interest. Still, they wouldn’t be holding these discussions if there wasn’t an interest in their part about going public.
According to CEO Drew Houston’s remarks at a technology conference, Dropbox is not yet profitable, but it does generate positive free cash flow. Although the company was once valued at as much as $10 billion, many dispute that number today, including some investors in the company who have written down the value of their shares.
The other major tech company that looks to be nearing an IPO is Spotify, the popular music streaming service with more than 30 million customers. Many pay $10 per month to stream unlimited amounts of music; the rest have to listen to ads.
The problem with Spotify is the company currently isn’t profitable and likely won’t be for a while longer. Sales are approximately $2.2 billion, but royalties alone total $1.8 billion. And keep in mind the company has to compete with companies like Apple, Google, and others with very deep pockets.
Tech Insider
