Congrats, Silicon Valley! You Wanted Less IPO Transparency, Trulia Shows That You Got It!

Next week, Trulia, is scheduled to hold its IPO. The company is a fast-growing service that is attempting to disrupt the market for renting office space.

That’s noteworthy in a market where tech IPOs have been on the quiet side since the Facebook IPO. But Trulia is notable for another reason.

The company became one of 11 companies to use a new process that allows it to file its prospectus confidentially with the U.S. Securities and Exchange Commission. The company actually filed its original S-1 back in May. But you and I couldn’t see it until late August.

So what happened? What changes were made? Who knows? Of course, you might be surprised that in light of all the problems with Facebook’s IPO that the process has become less transparent. After all, in that case, questions were raised about how certain decisions were made, and what information was disclosed to which investors.

However, the process that Trulia used was part of the sweeping JOBS Act passed earlier this year. Silicon Valley insiders clamored mightily for this bill, largely because it included provisions to allow for crowdfunding of startups.

But what many didn’t realize at the time was that the JOBS Act was actually several bills rolled into one. That included language to relax many of the rules surrounding filing for IPOs. In this case, companies with less than $1 billion in revenue can now file confidentially with the SEC, work out all the problems behind the scenes, and then make a cleaned-up version of the prospectus public.

According to Renaissance IPO, Trulia has set the terms for its IPO:

“Trulia, an online residential real estate marketplace with 22 million monthly unique visitors, announced terms for its IPO on Friday. The San Francisco, CA-based company plans to raise $90 million by offering 6.0 million shares (17% insider) at a price range of $14 to $16. At the midpoint of the proposed range, Trulia would command a market value of $432 million. Trulia, which was founded in 2005 and booked $51 million in sales for the 12 months ended 6/30/2012, plans to list on the NYSE under the symbol TRLA. J.P. Morgan and Deutsche Bank are the joint bookrunners on the deal.”

Is there anything nefarious here? Probably not. But still, at the end of the day, investors have less insight into Trulia, a company that continues to spill red ink. And they have less time to digest the numbers. Remember, from the time Facebook filed its prospectus to the time it debuted, conventional wisdom changed dramatically.

Yes, Trulia is small potatoes by comparison. But it doesn’t mean that shareholders deserve less protection. In an era where the Internet is still supposedly a force for more transparency, this step backwards looms as a big mistake that we’ll pay for down the line.