Backblaze, a leading cloud storage provider, recently announced its intention to go public via an initial public offering (IPO). This is a unique path compared to the recent success of Rivian, who chose to go public on a large valuation and with significant amounts of funding.
In this section, we will discuss the details of Backblaze’s IPO and what investors need to know to make an informed decision.
How Backblaze is different from Rivian
Backblaze, an online data protection company, has recently announced its upcoming Initial Public Offering (IPO). This IPO will create a publicly-traded company and offer different investors a chance to invest in the success of their product. Compared to Rivian’s recent IPO, which was touted as the biggest debut since Uber and valued at $35 billion with more than $27 billion raised from investors, Backblaze’s IPO is taking a different approach.
Unlike Rivian, which gained considerable attention for its electric pickup truck design and raised sizable funding before becoming public, Backblaze is going for a smaller valuation with much less pre-IPO funding. This option may be attractive for investors looking to earn substantial returns from their investment rather than relying on market conditions and potential future gains once the stock goes public. Instead of appealing to venture capitalists who are typically attracted by large pools of money raising rounds that could fetch vast amounts of funding — like Rivian — Backblaze will begin trading with just 11 million shares already available on Nasdaq Global Select Market at approximately $23 per share.
As a result, Backblaze offers an interesting alternative for those wanting to invest in private companies looking towards an IPO while deterring outside investors intent on profits built solely around speculation of widespread investor acceptance based on increased values over time due to hype or trendiness surrounding certain industries. Given its expected long-term effects within the tech sector, it has created a unique opportunity that would potentially prove quite lucrative down the road — one worth considering.
Backblaze’s IPO goals
Backblaze, a cloud storage and data backup provider, is poised to become the latest technology company to go public this year. The company has chosen to adopt a different approach than its peers such as Rivian, forgoing the traditional venture funding route in favor of an initial public offering (IPO) on a small valuation and minimal funding. While some observers have questioned the wisdom of this move, taking it offers several advantages that could benefit the company and its investors in the long run.
The main goal of Backblaze’s IPO is to provide access to capital without taking on additional debt or diluting existing shareholdings by selling equity stakes in the company. This allows management to use new funds for strategic investments without significantly affecting shareholder value. Additionally, going public provides greater transparency around financials and gives existing shareholders more liquidity.
In addition, there are potential tax savings associated with taking an IPO instead of opting for a Series A or B venture round. By avoiding long-term grants or tax loans involved in Series A/B rounds, Backblaze can keep more cash available while creating goodwill throughout its investor base. Furthermore, due to the way an IPO process works, Backblaze’s offerings may be eligible for special tax treatment as “qualified small business stock” under certain guidelines laid out in the Tax Cuts and Jobs Act which could save investors money down the line when they decide to sell off their shares upon exiting their investment.
The going public process itself may also be attractive for BackBlaze; unlike traditional venture rounds where institutional interests can have significant influence on decision making and where entrepreneurs often have limited say over their own decisions in exchange for capital infusion – with an IPO all shareholders receive equal voting rights allowing BackBlaze founders and current management team retain more control over where their business is headed moving forward instead being beholden second-party outside interests
Backblaze recently announced their intention to go public through a direct listing, and the accompanying financial analysis has revealed some interesting insights. Much like Rivian, Backblaze’s IPO route is relatively unconventional, though their valuation is much lower and the amount of funding raised is much smaller.
This article explores the financial and strategic implications of Backblaze’s listing and how it affects potential investors.
Backblaze is a cloud storage and data security company with an alternative approach to the traditional IPO. Unlike many tech companies who have gone public after raising large sums of venture capital, Backblaze is going public at a relatively low valuation and with minimal funding.
The company has only raised $75 million since their 2016 launch, a fraction of the billions typically raised before IPO.
Backblaze’s financials are very impressive given the comparatively low amount they raised. The company reported $86 million in revenue for 2019, an 81% increase over 2018 and a 19% over 2017. During that same period profits rose 113%, net income margin was up 68%, freemium customers were up 60%, and paying customers grew 45%. Despite the low funding level, Backblaze demonstrated strong metrics with double-digit growth across key metrics and had gross cash from operations of $22M on top of competitively small operating expenses of just over $20M in 2019 – indicating significant profitability compared to peers in cloud storage and data security industries.
While Backblaze’s strategy differs from many tech companies who take large amounts of capital before going public, the huge growth potential will be enough to draw investor attention regardless. Investors should keep their eyes peeled as Backblaze takes an unconventional approach going public at a more modest valuation – with excellent results so far – making for an interesting IPO to watch as it unfolds.
Valuation of Backblaze
Backblaze stands out vis-à-vis its peers because it focuses on providing inexpensive cloud storage solutions. When evaluating the company’s value, it is important to consider their unique business model, which contributes heavily to their bottom line. As a result, Backblaze has opted for a more conservative (relative to other publicly traded companies) stock valuation ahead of its initial public offering (IPO).
Backblaze does not engage in acquisitions or significant venture funding as many competitors do; instead, it seeks to make money from a smaller capital base nearly exclusively by selling storage services. This has enabled them to maintain a relatively low valuation compared with their peers while remaining competitive on price and scalability. According to PitchBook data, Backblaze is valued at $2.5 billion before its IPO, significantly lower than Rivian’s $27 billion valuation before going public in December 2020.
It’s worth noting that the small valuation and minimal funding might have something to do with Backblaze’s conservatism when it comes to growth strategies: the company strives for sustainable growth rather than meteoric highs and works diligently on cost controls across areas such as product development and operations. As such, while investors may be initially wary of the company’s stock valuation before an IPO, market demand for a well-run company with excellent offerings should quell some of these concerns once the public offering occurs and reveals just how much investors value Backblaze’s services and solutions.
Backblaze’s initial public offering (IPO) is somewhat atypical, as the company is going public with a small valuation and minimal funding, which is the opposite of Rivian’s strategy. As a result, investors need to note the risks associated with Backblaze’s IPO.
This section will explore the key risk factors that prospective investors need to know.
Potential risks associated with Backblaze’s IPO
Backblaze Inc. is taking a different path than recent high-profile tech IPOs such as Rivian, Slack and Uber. Unlike those companies, Backblaze is going public with a smaller valuation and minimal funding. As a result, investors should be aware of certain risks associated with this IPO before making an investment decision.
The primary concern for investors looking to invest in Backblaze could be the company’s ability to secure additional capital needed for expansion or finance any potential acquisitions. The company has not provided guidance on anticipated capital requirements nor have they outlined (or committed to any) plans for use of proceeds from the IPO — these are important factors that could affect its future financial performance. Additionally, the lack of visibility into how Backblaze will manage its finances moving forward can be concerning for shareholders concerned about dilution or decreases in net income/revenue growth in response to discretionary market/operational investments or acquisitions/divestitures.
In addition, there may also be liquidity concerns given its small scale since it will likely have limited access to capital markets should it need funds urgently compared to larger publicly held companies which have better access at any given time. As well, because Backblaze will maintain only a very small public float post-IPO and therefore considerably fewer shares sold are expected to trade actively in the secondary market relative to other U.S.-listed stocks, this could lead to price volatility both on the buy side as well as sell side which could lead in increased risk exposure for investors due limited trading options available at any given time making entry or exit (or cost basis management) complicated.
Market and industry risks
As for any public company, Backblaze’s performance will be subject to market, economic and industry risks. These risks include but are not limited to:
-Competition: Increased competition could reduce demand for Backblaze’s products and services or adversely affect prices.
-Regulatory Environment: Governmental, legal or other regulatory requirements or changes could increase Backblaze’s business costs.
-Data Protection: Advances in data protection technology and/or increased privacy laws may change how companies, including Backblaze, manage and store customer data, which could result in reduced sales or margin compression.
-Technology: Rapid technological changes within the market may render existing technologies outdated and less valuable. Additionally any issues with technology enhancements or new product rollouts could disrupt delivery of products and services delivered by Backblaze resulting in decreased revenue and profitability.
-Supply Chain Risks: Disruptions to suppliers (such as fasteners parts, contracted labor etc.) may cause delays in production of goods leading to a decrease in revenues.
-Geopolitical Risk Factors: Instability brought about by social unrest or economic downturns can result in unexpected disruptions to supply chains or decreased customer demand due to legal areas prohibiting foreign currency transactions resulting in lost sales revenue/profits from Backblaze’s operations overseas.
Backblaze takes opposite IPO route to Rivian, going public on small valuation and minimal funding
Backblaze, an online storage provider, recently announced its intention to hold an initial public offering (IPO). However, unlike other companies that have gone public more recently, such as electric vehicle maker Rivian, Backblaze is taking the opposite route with its IPO. With a small valuation and minimal funding, the IPO allows investors to buy into a new business at a low entry point.
Let’s explore the potential investment opportunities associated with the Backblaze IPO.
Potential benefits of investing in Backblaze
Investing in Backblaze’s initial public offering (IPO) could benefit many investors. The company, which provides cloud storage services to businesses and individuals, is taking an opposite route of other tech startups in the IPO process. As opposed to most companies that go public at large valuations and significant funding, Backblaze’s IPO is set to be on a smaller valuation of only $5 billion with minimal funds raised.
For investors, this means that their investments will not get tied up in dilution or ‘unicorn’ fees associated with more extravagant fundraises like Rajesh Rao did for Rivian (raising over $6 billion from multiple investors at a post-money valuation of $35 billion). Although both companies will have large exits when they go public, it is also less risky to join the ride with Backblaze as they are already listed on the stock exchange instead of being subject to the whims of venture capitalists and corporations who may or may not push forward with IPOs.
From an investing point-of-view, Backblaze being listed on the stock exchange also means more transparency is attached to its financing round due to its requirement for compliance with financial regulations such as Sarbanes-Oxley. In contrast, private startups are not subjected to these requirements—making their financials and operations much more opaque. With shares trading on a larger exchange and smoother compliance rules it opens up new options for investors looking for ways to safely enter into a technology space that is filled with volatile types of investments by securing larger positions earlier in what might become massive businesses.
Ultimately, investors who decide to make investments in BackBlaze’s IPO will likely gain access to a well-established cloud storage provider strategy business that has already established itself as an important part of the technology industry and be able to benefit from its financing round having minimal dilution compared with certain competitors like Rivian while enjoying greater transparency into the company’s affairs due its listing on major exchanges.
How to invest in Backblaze
Backblaze, the cloud storage provider, is going public after a long history of private investments and more recently large accelerators. The company is taking an unorthodox IPO route and will pursue a direct listing that does not involve issuing new shares to raise capital or a large investment from major funds. Instead, existing shareholders can sell their shares directly to investors on the open market.
Given the unique structure of its initial public offering (IPO), potential investors must take extra caution when investing in Backblaze. Evaluating the company’s financials is critical since there is less transparency in this situation than a traditional IPO. Financial experts recommend that individuals analyze Backblaze’s historical financial data and growth projections before investing funds. Additionally, traders should review the company’s recent contracts with larger firms and their overall track record for profitability to better understand how successful their strategy may be.
It is important for prospective investors to understand where Backblaze stands in its lifecycle before making an investment decision as this could influence its future value as a publicly-traded company. Besides researching the company’s fundamentals, it’s also helpful to monitor developments with other startups going public with direct listings such as Rivian or those who did it earlier like Slack and Spotify so investors can gauge wider sentiment around this type of IPO move. Finally, since existing shareholders are already selling shares on the open market, traders should consider current stock prices relative to past highs or lows when devising trading strategies for later liquidity events such as option premiums or warrants up exercise.
Backblaze’s IPO demonstrates how innovative companies can go public with a different approach than the traditional method. By taking this different route, Backblaze has minimized the funding and valuation they raised while still getting the public exposure they desire. In addition, this approach allows investors to get in on the ground floor and possibly benefit from long term gains as the company continues to innovate and grow.
Let’s take a closer look after Backblaze’s IPO.
Summary of key points
The recent Backblaze IPO provides an interesting comparison to the much-talked-about Rivian, which raised a massive $2.5 billion in private funding, and then went public with a valuation of around $50 billion. In contrast, Backblaze was able to go public on a comparatively small valuation of just $1.3 billion, despite raising only minimal funds. Most of its funding came from sales revenue.
This is due to several key differences between the two companies: Backblaze has been profitable since 2017, has provided ‘essential’ services during the pandemic such as cloud storage for healthcare providers and schools, and recently announced an AI project that promises to provide even more services. On the other hand, Rivian’s business model aims to upend the auto industry with its innovative electric pickup truck designs.
For investors looking for stock market exposure to tech companies outside of FAANG (Facebook, Amazon Apple Netflix Google), Backblaze appears to be an interesting choice as it takes a unique approach relative to many other IPOs held this year or planned for 2021. In addition, the company’s lower valuation should mean more upside potential on a smaller capital raise basis – but investors should consider carefully whether their risk tolerance allows them to take part in what is likely to be an exciting yet volatile ride over the coming year.
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