Will Casper be the latest startup humbled by the public markets?
Casper will make its brave, new public market debut today.
The direct-to-consumer mattress startup priced its IPO at the low end of its already reduced range.
Casper cut its IPO share price to $12 to $13 from $17 to $19 on Wednesday, signaling that it’s had a hard time attracting enough demand at the higher levels. This new share price would value the company at roughly $476 million, which is a significant decrease from its private valuation of $1.1 billion. Casper raised a total of nearly $340 million in venture funding from investors including IVP, Lerer Hippeau, Target and New Enterprise Associates.
Casper has dominated marketing over the years, but the prospectus tells us it’s somewhat of a double-edged sword. In its IPO prospectus, we learned that the company has spent $423 million on marketing since 2016. For every $1 it spent on marketing, it brought in $3 in revenue. More than 73% of its gross profit last year went to sales and marketing costs.
Let’s not forget that there’s a higher bar to clear in the public markets, and those investors want to see profitability — or at least signs that there’s some sort of viable path to profitability. Casper is not yet profitable. It generated $358 million in 2018 revenues, and posted $92 million in losses over the same period.
The unicorns who’ve been brave enough to go public have gotten the cold shoulder from public market investors, with Uber, Lyft, and SmileDirectClub trading below their IPO prices. (And of course, we all saw what happened with WeWork.)
Will Casper be the latest over-eager startup to get humbled by the public markets? Or will it surprise us all?
HOUSEKEEPING: I’ll be out of the office tomorrow, so please send deals for inclusion to my colleague Lucinda Shen at email@example.com. See you on Monday!
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PRIVATE EQUITY DEALS
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- Flexera acquired Revulytics, a Waltham, Mass.-based software usage analytics company. Financial terms weren't disclosed. Revulytics had raised approximately $14.5 million in venture funding from investors including Ascent Venture Partners, Core Capital Partners, and Rockford Capital.
- Madison McIlwain joined Defy Partners as an associate.
- Yellow Wood Partners promoted Tracy Pizzi to partner.
- Rohan Narayan joined One Rock Capital Partners as a partner.
- First Reserve promoted William Brown and Michael Scardigli to managing director, Thomas Amburgey to director, and Patrick McEnery to vice president of Credit & Capital Markets.
- Jerry Lu joined Advancit Capital as an associate.
- Alpine Investors promoted Matt Moore to partner and Daniel Cohen to principal.