Backblaze takes opposite IPO route to Rivian, going public on small valuation and minimal funding

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  • Backblaze went public this week after generating just $16 million in revenue in the second quarter.
  • The company is still valued at less than $1 billion after the IPO pop.
  • That same week, Rivian went public and is now worth over $100 billion.

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Electric-vehicle maker Rivian Automotive, which has almost no revenue, hit the headlines this week after raising nearly $12 billion in its sales. IPO And then to see its market capitalization surpass $105 billion, leaving Ford and General Motors behind.

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Backblaze, at the other end of the IPO market, was a cloud service for backing up data.

In the era of blockbuster market debuts before astronomical private financing rounds, Backblaze is a return to the times when sub-billion-dollar companies regularly went public to raise their profile in an effort to raise capital and win customer trust.

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For the year ended June 30, Backblaze’s revenue was $59.9 million, according to the company’s prospectus, with second-quarter sales rising nearly 17% to $16.2 million.

Backblaze just raised $100 million in its offering, which is less than a twentieth of the amount raised by companies including GlobalFoundries, Robinhood and Bumble this year. Backblaze shares rose 24% on their opening Thursday and 12% on Friday, raising the price to $22.31 and giving the company a market cap of nearly $650 million.

More than 100 technology companies have listed on US exchanges this year and, by the standards of its peers, Backblaze is a micro-cap. At least 21 tech companies to debut in 2021 are worth more than $10 billion. Coinbase is valued above $70 billion, Roblox is valued at over $50 billion and Affirm is above $40 billion.

All of those companies routinely tap venture investors for vast amounts of capital en route to public exchanges. Rivian raised $2.5 billion in a pre-IPO round in July. In contrast, Backblaze raised less than $3 million from outside investors since its formation in 2007 and earlier this year, when it issued $10 million in convertible notes.

“Over and over again investors have looked at it and said, ‘Wow, I can’t remember the last time I raised a company only to reach the public markets,'” said Backblaze co-founder and CEO Gleb. Budman in an interview on Thursday after the company’s market debut. “The fact that we’ve been able to be so capital-efficient in building the company on a large scale is something they were very surprised by.”

One of Backblaze’s competitors is Amazon, the fourth most valuable American company in the world. Amazon has been one of the great growth stories over 25 years, expanding from online bookseller to giant e-commerce site to full-stack technology platform.

But when Amazon went public in 1997, the company was generating $16 million in quarterly revenue, Until about a decade ago, when new entrants began to flock to the private markets, it was still common for tech companies to go public with valuations of less than $1 billion.

Backblaze executives had other reasons to go public in a highly competitive market that offers the largest cloud services in the world from Amazon, Microsoft, and Google. Backblaze currently stores two exabytes of data — that’s 2 million terabytes — and has half a million paying customers.

Budman said the IPO provided a clear opportunity to open Backblaze’s books to clients and prove that it is mature enough to become a long-term technology provider.

He added that the new capital will help the company expand its sales team as it goes up against industry stalwarts. Its B2 business, which competes with Amazon’s S3 cloud storage offering, grew 61% in the second quarter.

“I really hope we’re showing that it’s possible for a mid-market company to open the way for more companies to do the same,” Buddman said. “It used to be that other companies of other sizes went public. I think people are scared of that and so wait longer and longer.”

Watch: Confluent CEO Jay Craps: Cloud services are a new way to deliver efficiencies to companies


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