3PAR giving all the right signals -- likely IPO ahead
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When a company uses the word "mezzanine," as its chief executive David Scott did in a phone call with us Monday afternoon, it means one thing: An IPO is likely in the cards, and it could come soon. Mezzanine, as you know, refers to the "middle" floor, or in this case the last stage of being a private company before it goes public.
On the surface, 3PAR's business is pretty boring. Explain utility storage to a 13-year-old, and watch him doze to sleep. Basically, it refers to selling storage services to companies just as an electric utility sells power to residents. Customers pay for what they use.
Wearying perhaps, but it reminds of us the straight-laced neighbor you see walking out of the house at 8:00am, in khakis and loafers, and driving off in his Lexus: He is a block and tackle guy, not sexy like the Web 2.0 guru, merely frustratingly competent, more prone to make money, and fundamental to Silicon Valley's backbone. And when that neighbor gets rich, you scratch your head and ponder: 'Why didn't I think of that?' By which time, it is too late.
Ok, we don't jump the gun. 3Par hasn't gone public yet, and it could stumble yet (and bring that boring neighbor back to his rightful place). But listen to the sounds:
Investor Integral Capital Partners and Alliance Bernstein approached 3Par to invest, even though 3Par didn't need the cash, says CEO Scott. "They put an offer on the table we couldn't refuse," he says. The Alliance Bernstein investment is significant because it is only the second private investment the firm has ever made, according to Scott.
The company made "eight digit" revenues in the first quarter, on an annual basis, but had only a "six digit" burn rate for the quarter, says Scott. So 3Par is at least break even, and turning profitable. And it is selling its services to some big names, including Merrill Lynch, Verizon, Priceline.com, MySpace.com and eHarmony.
Sun invested in this company, but then Sun realized it had a competitor on its hands when 3Par stole a customer or two, and so Sun stopped investing in the company. Cisco and Veritas (since bought by Symantec) both invested earlier into 3Par too, but also passed this time around.
Another good sign is that the $30 million represented less than 10 percent dilution to existing shareholders, the company says. That means the company is at least valued around at $300 million, a nice big figure and easily sizeable enough to make a public company.
3PAR has raised $183 million since it was founded in 1999. So at a $300+ million valuation, this company is no homerun yet for investors. But with some more old fashioned block and tackle, it might yet do quite well -- and if it goes public, it will make an elite group in Silicon Valley that consisted of only eight companies last year. Stay tuned...
http://www.siliconbeat.com/cgi-bin/mt331/mt-tb.cgi/1274
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13 yrs, $183 M, $10+ M rev... *sign*
How do people manage to raise this much, make so little, and still stay a CEO for 13 yrs. What a sinecure.
Yuri Ammosov on April 4, 2006 1:27 PMComment link
Yuri- Where you do get 13 years from? According to the article the company was founding in 1999.
John Callaway on July 31, 2006 8:12 PMComment link
