Bazaarvoice Stock Opens Trading Today

After filing their registration statement in August, Bazaarvoice began trading on the NASDAQ today. It’s the first Austin tech company to go public this year, with the most recent Austin tech IPO being HomeAway. The company initially looked an a $8 – $10 price for the stock, but it priced last night at $12 with initial trading this morning at around $16.

This is a great deal for Bazaarvoice and a great deal for Austin for many reasons.

Acquisition Offers. As a private company that was growing rapidly, Bazaarvoice was surely an acquisition target on everybody’s radar. Speculation runs rampant with questions like “Is IBM going to buy them?” An IPO puts much of that discussion to rest, or at least provides a very obvious number to the market value of the company.

Acquisition Currency. The company can now buy smaller competitors, or other technology companies that have complementary products for stock instead of cash. That is one major thing you just can’t do as a private company. Company stock is a great currency to use for acquisitions.

Employee Liquidity. As soon as the company’s trading lockup expires, employees with vested options will be able to turn their shares into cash. A rare feat that many attempt, but few achieve.

The Startup Circle of Life. Senior executives with significant stock positions who made millions will eventually depart and have enough money to fund and start their own technology companies. Even more important, they will have the experience and understanding of what it takes to build a high growth technology company. 3-5 years from now people will be talking about certain startups as “former Bazaarvoice people.”

Congrats to my many friends at Bazaavoice!

About Bryan Menell

Bryan is the Managing Editor for AustinStartup and the CEO of Mahana. He is a co-founder of Capital Factory, an investor and advisor, and runs the popular Austin Tech Happy Hour with his wife.

Comments

  1. It also saves the company… as they are currently bleeding money if you looked at the S1 filing. They eventually need to be cash flow positive given their current burn rate. In the end, it will be good for Austin, but we should strive for companies that are not only instilling a “great culture” but are actually making cash.

  2. austinstartup says:

    Investing in losses is something that all fast-growing tech companies do during times of rapid expansion. The best known example is probably Amazon.com which posted huge losses after going public, and then once they gobbled up market-share and established itself as the leader in the industry, slowed down the growth and focused on profitability. I would imagine that Bazaarvoice could slow down growth and become profitable any time they want, but the long term value of the growth far outweighs the short term cost of the investment.

  3. This is great for Austin and like Bryan said even though there are losses now, they are on their way to creating wealth for Austin not just in money but also in experienced people who can invest in or create new companies. This is just one of the reasons Austin has fared better than most other cities in the US during the recession with regards to new jobs created!

    Congrats BV team. We look forward to you continuing to grow and build a sustainable company. It’s not often a founder/entrepreneur can take a company from the “garage” to an IPO.

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