On Tuesday, Snowflake sold 28 million shares for $120 each, a sharp increase from its initial price range of $75 to $85. It raised a total of $3.4 billion in its offering, which was led by Goldman Sachs and Morgan Stanley.
The company’s revenue has been growing quickly, jumping 133 percent in the first six months of the year to $242 million, up from $104 million during the same period last year. But it is also unprofitable, losing $171 million in the first half of this year. In its offering prospectus, Snowflake emphasized that once customers begin using its services, it often gets them to move more of their data onto its platform.
Snowflake’s largest investors include Sutter Hill Ventures, which owns 20 percent of the company, as well as Altimeter Capital, Redpoint Ventures, Sequoia Capital and Iconiq Capital. Last week, Berkshire Hathaway and Salesforce Ventures each agreed to purchase $250 million of shares in Snowflake’s public offering, stoking hype around the listing.
In recent years, public market investors have been skeptical of the richly valued, money-losing “unicorn” start-ups that enjoyed a decade of free-flowing venture capital. Last year, Uber’s I.P.O. flopped and WeWork, the co-working company, pulled its I.P.O. after intense scrutiny.
The arrival of the coronavirus in March further threatened to upend the start-up industry. But the opposite has happened. Start-ups and big technology companies alike have benefited as people work and learn from home and live more of their lives online. Now start-ups are taking advantage of the booming stock market and investor excitement for tech.
Several tech start-ups with upcoming market debuts plan to try new methods and processes for the transaction. Some, including OpenDoor, the vehicle sales site Shift Technologies and various electric vehicle makers, are agreeing to “blank check” mergers via special purpose acquisition companies. Such transactions offer more flexibility around deal terms and can be completed quickly.
Others, like Palantir and Asana, said they would go public via direct listing, which bypasses the traditional underwriting process. With a private valuation of $20 billion, Palantir could be the largest company to try such a transaction, following in the footsteps of Slack, the workplace collaboration service, and Spotify, the music streaming company. Venture capitalists have argued for this method because it does not aim for a first-day trading “pop” that indicates the company could have priced its shares higher and raised more money from the transaction.
