Ad Tech's IPO Bubble: Real-Time With LiveRail CEO Mark Trefgarne
Ad technology company IPOs were aplenty in 2013, and rumors of more in 2014 are circulating. One such company primed for a 2014 IPO is LiveRail, which TechCrunch reported in early December.
LiveRail’s co-founder and CEO Mark Trefgarne recently spoke with RTM Daily about a potential LiveRail IPO and ad technology IPOs in general.
Why have we seen so many? Why do companies want to go public? Which will we see more of in 2014: IPOs or M&As?
See his thoughts on this interesting topic below:
RTM Daily: For starters, are you willing to speak to the rumors that LiveRail might be seeking an IPO in 2014? Why, and when?
Mark Trefgarne: We’ve been thrilled by the dramatic growth in programmatic video during 2013 and are extremely optimistic that that growth will continue in 2014. LiveRail has benefitted from success and growth in the market. An IPO is a path we are definitely exploring and we’ll have more news in the second half of 2014.
RTMD: What's with all the ad technology company IPOs we've seen of late?
Trefgarne: Over the last five or six years the ad tech space has attracted a great deal in venture capital investment and the sector has produced a number of very successful fast growing companies. In seeking to deliver shareholder liquidity and raise additional capital for further growth, the public markets are a natural avenue for these companies to explore.
RTMD: Some of the other “ad tech going public” moves haven't exactly panned out. How does that impact other companies?
Trefgarne: The public market has separated ad tech companies into two clear categories: those that they view as legacy ad networks and those that they view as true software and programmatic companies.
Companies such as Rocket Fuel and Criteo, which provide clear programmatic offerings, have seen material success in the public markets.
Those in the former category are finding it tremendously difficult to maintain investor confidence, souring the opportunity for future IPOs in the same category.
RTMD: Time for a basic question. What is the reason(s) for seeking an IPO in the first place?
Trefgarne: There are three main reasons:
1) Investor/shareholder liquidity. This allows those who have stock in the company to trade in for cash.
2) Raising capital. Fast growing businesses need cash, and an IPO is an opportunity to add $100 million or more to a company balance sheet, enabling a company to invest in everything from acquisitions to hiring.
3) A currency for acquisitions. It’s far easier for a company with a publicly traded stock, with an accepted market value to that stock, to make stock-based acquisitions of other companies.
RTMD: Do you think we will see a handful of ad tech IPOs again in 2014? There have been numerous rumors already.
Trefgarne: Without a doubt. There are a handful of highly scaled companies in our space who have either filed or selected their bankers and are essentially ready to go. The only potential challenge is the broader macro-economy, but should things remain stable then there will absolutely be more ad tech IPOs in 2014.
RTMD: In contrast to the above question, do you think we will see more M&A activity instead, considering, as previously noted, some other ad tech IPOs haven't instilled confidence?
Trefgarne: I think you will see more meaningful-sized IPOs than large-scale acquisitions. There just aren't that many companies that can pay the substantial cash required for major ad tech companies.
Google, Yahoo, Facebook, AOL will certainly make some acquisitions, but from an absolute number and aggregate deal-size standpoint, expect to see more action from the public markets.
RTMD: Thank you for your time.