The software integration specialist floated above its range on Friday in an offering that could be the first of some hefty returns for Salesforce Ventures' stable of unicorns in 2017.
Salesforce Ventures, the corporate venturing arm of enterprise software provider Salesforce.com, achieved another exit on Friday in a $221m initial public offering by US-based integration software producer MuleSoft.
The company issued 13 million shares on the New York Stock Exchange on Friday priced at $17 each, above the $12 to $14 range it set earlier this month, allowing backers that also included networking technology supplier Cisco and enterprise software producer ServiceNow to exit.
Founded in 2006, MuleSoft has built a software integration platform that helps businesses integrate their various applications into a single network. It has more than 1,000 customer, more than 30 of which each provide over $1m in sales of subscriptions and services each year, across 60 countries.
According to its IPO prospectus, MuleSoft made a $49.6m full-year loss in 2016 from revenue of approximately $188m, having made a $65.4m loss the year before from $110m in revenue.
The offering followed $259m in funding, including a $128m series G round in 2015 led by Salesforce Ventures and backed by ServiceNow, Cisco’s Cisco Investments unit, Sapphire Ventures, Adage Capital Management, Brookside Capital, Sands Capital Ventures, New Enterprise Associates (NEA), Lightspeed Venture Partners, Meritech Capital Partners, Bay Partners, Hummer Winblad Venture Partners and Morgenthaler Ventures that valued it at $1.5bn.
Salesforce Ventures first invested as part of a $37m series E round in 2013, subsequently returning for a $50m round the following year that valued MuleSoft at $800m and which included Cisco, Sapphire Ventures, NEA, Lightspeed, Meritech Capital, Hummer Winblad, Morgenthaler and Bay Partners.
None of the corporates are major investors however, the company’s largest shareholder being Lightspeed Venture Partners, which saw its stake diluted from 17% to 15.3% in the offering. Other notable shareholders are Hummer Winblad (a 14.1% stake post-IPO), NEA (12.7%), Morgenthaler (6.7%), Sapphire (6%) and Bay Partners (5.6%).
Goldman Sachs and JP Morgan Securities are joint lead book-running managers for the IPO while BofA Merrill Lynch is an active book-running manager. Allen & Company, Barclays Capital and Jefferies are book-running managers while Canaccord Genuity, Piper Jaffray and William Blair & Company are co-managers.
The underwriters have the 30-day option to acquire another 1.95 million shares at the IPO price, which would increase the size of the offering to approximately $247m, and MuleSoft has said it expects the offering to close by Wednesday.
MuleSoft’s optimism seems well-founded. Its stock opened at $24.25 on Friday and held steady to close at $24.75, an increase of around 44% from the offering price.
The offering is Salesforce Ventures’ second exit of the year, after Amazon Web Services’ acquisition of Do earlier this month, but it could be the first of many as the success of MuleSoft and the kickstarting of the IPO market in general looks likely to encouarge several more enterprise software companies to float while the iron is hot.
MuleSoft formed part of a substantial stable of unicorns – venture capital-backed companies valued at more than $1bn – built up by Salesforce Ventures, including SurveyMonkey, InsideSales, Apttus, Anaplan, MongoDB, Evernote and the daddy of them all, Dropbox, the data storage provider valued at more than $10bn in its last round.
SurveyMonkey CEO Zander Lurie said in late 2016 the company is looking beyond 2017 to go public, but Anaplan has said it is preparing a flotation and InsideSales and Apttus have been touted as likely IPOs this year. Dropbox reportedly met with advisers in August 2016 to discuss plans for an offering but has so far been quiet on the subject.
Regardless of that, the relative success of messaging platform Snap’s IPO – the largest for a VC-backed company in two and a half years – combined with MuleSoft’s bump will inevitably lead to more offerings, particularly as investors may want to get in before a market downturn, indicating that 2017 could well be the year when Salesforce Ventures cashes in and starts racking up some big exits.
