Online survey company SurveyMonkey said on Thursday it has started an $800 million recapitalization that will allow it to cash out early shareholders and investors.
The financing underscores a trend in Silicon Valley to delay initial public offerings long beyond the time a company reaches revenue and profitability benchmarks that would have made it an IPO shoo-in in years past.
"We're not saying we're never going public," said Dave Goldberg, chief executive of SurveyMonkey, an online survey company. "This was a better path for us, and it would save us some of the hassles of running a public company."
It is a sentiment seemingly shared by many venture-backed CEOs running companies that seem more than ripe for IPOs. While an IPO was once seen as the pinnacle of success for an entrepreneur, it has lost luster for many start-ups.
High-profile botched IPOs are contributing to the notion that tapping public markets fails to mark a "we've made it" moment.
"For us, an IPO is not a strategy per se," said Jonathan Zabusy, chief executive of Seamless.com, an online food-ordering company. "Given we're a profitable company and have been for a long time, we do not need to use an IPO to raise money."
Existing profits are funding the New York-based company's rapid growth into more cities, Zabusy said.
Social network Facebook delayed going public long beyond the point when many analysts thought it should tap public markets. The delay may have contributed to its troubled IPO, as many potential investors focused on its slowing growth rates. Facebook debuted at $38 in May, sank below $20, and is now trading in the low $30s. Facebook's chief operating officer, Sheryl Sandberg, is married to Goldberg.
Even worse, other once high-flying companies have gone public, fallen hard, and failed to stage much of a recovery. Think daily-deals company Groupon , which listed in late 2011 at $20 and is now trading around $5, or gaming company Zynga , which listed in late 2011 at $10 and is now trading around $2.50.
Companies that have raised outsized venture rounds in the last year or so include coupons company WhaleShark media, which raised $150 million from Institutional Venture Partners and others in late 2011; payments service Square, which received $200 million from Rizvi Traverse Management in September; and microblogging service Twitter, which received $800 million from DST Global and others in late 2011.
In Twitter's case, $400 million went to buy out employees and existing shareholders, rather than being invested back in the company, in a situation paralleling SurveyMonkey.
SurveyMonkey's financing comprises a $444 million equity component plus $350 million in debt financing. The equity is being sold by existing SurveyMonkey shareholders, including early employees.
The equity tranche is led by Tiger Global Management, whose partner Lee Fixel will join SurveyMonkey's board of directors. Google is also participating, with its executive David Lawee joining the board as an observer.
The funding round values the company at $1.35 billion. After the recapitalization, Goldberg said that the company's largest investors will be himself, Spectrum Equity and Tiger.
The company also expects to raise $350 million in debt financing led by JP Morgan, Goldberg said.
SurveyMonkey had revenue of $113 million and earnings before interest, depreciation, taxes and amortization of $61 million in 2012, he said.
SurveyMonkey was started in 1999. Goldberg, a former executive at the music division of Yahoo , became chief executive 10 years later.
(Reporting by Sarah McBride; Editing by Leslie Gevirtz and Leslie Adler)