The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.
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Rubrik shares hit the New York Stock Exchange Thursday debuting at $38 a share. The cybersecurity company priced it shares at $32 apiece Wednesday night, just a hair over its initial target range of $29 to $31 after raising $752 million. This share price gives Rubrik a fully diluted valuation of $6.6 billion, up 88% from its last primary valuation of $3.5 billion in 2019.
Rubrik sells cloud-based security software to enterprise customers and has 1,700 customers with contracts worth more than $100,000 and 100 customers who pay the company more than $1 million a year. The Silicon Valley startup was founded in 2014 and has raised more than $550 million in venture capital, according to Crunchbase data.
The VCs hoping the most that Rubrik’s stock keeps climbing are Lightspeed and Greylock. Lightspeed backed the company in five separate rounds, including leading the company’s Series A round back in 2015. Lightspeed, and those affiliated with it, own 23.9% of Rubrik’s shares prior to the IPO, according the company’s S-1 filing. The firms’ conviction in the company might come from the fact that Rubrik co-founder and CEO, Bipul Sinha, was formerly a partner at Lightspeed from 2010 to 2014. Sinha owns 7.6% of shares.
Greylock holds 12.2% of Rubrik’s shares. The venture firm led the startup’s $41 million Series B round in 2016 and participated in the Series C and Series D rounds as well. Greylock partner Asheem Chandna has sat on the company’s board since 2015.
In addition to Sinha, Rubrik’s other two co-founders hold notable stakes. Arvind Jain, a co-founder who is now the CEO of AI work assistant startup Glean, holds a 7% stake. Arvind Nithrakashyap, co-founder and current Rubrik CTO, holds 6.7%.
Other big-name VCs backed the company, too. Khosla Ventures led Rubrik’s Series C round in 2016; IVP led the company’s Series D round in 2017; and Bain Capital Ventures led the company’s Series E round in 2019. It’s unclear what percentage of shares these firms still own, but it’s under 5%, as none of these investors were named in the company’s S-1. NBA All-Star Kevin Durant’s Thirty Five Ventures was also an investor.
The results of Rubrik’s IPO are under more scrutiny than some of the other recent public listings, because Rubrik’s debut looks more like a 2021 IPO and less like the other 2024 IPOs. Ibotta debuted as a profitable company. Astera Labs and Reddit both had recently swung to a GAAP net profit. Rubrik, however, is as an unprofitable business seeing its losses continue to grow, not shrink.
The company reported that its revenue grew a little under 5% from its fiscal 2023 year to its fiscal 2024 year, growing from $599.8 million to $627.9 million. At the same time, the company’s losses continued to grow: Its net losses grew from 46% in its fiscal 2023 to 56% in its fiscal 2024 year.
The company’s metrics do have a bright spot, however: subscription revenue. In the company’s most recent fiscal quarter, subscriptions made up 91% of the revenue, up from 73% a year prior. Subscription revenue tends to be sticky, and growth there could explain why some investors are more confident about the future prospects of Rubrik despite its current losses and lack of profitability.
Rubrik is the fourth venture-backed company to go public in recent months as investors seem eager to reopen the IPO market. All three companies that went before Rubrik — Ibotta, Reddit and Astera Labs — popped on the first day of trading and have all since settled, some in better positions than others. But none has been a disaster or negative omen for other potential IPOs this year.
While four positive IPO debuts could spark more companies to come off of the sidelines, the current guidance that interest rate cuts may not come as early in 2024 as many had predicted may put a damper on the the IPO market’s recent momentum.
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Ibotta began it’s path as a public company on Thursday by opening at $117 per share, a big increase from its IPO price of $88, itself an increase from its proposed range of $76 to $84 per share.
And this pop is despite boosting the size of its offering earlier in the week, with existing shareholders expanding their sale by just under one million shares.
Shares are not continuing to climb in early trading, but are holding steady above its IPO price, at around $100 at the time of writing.
The company left money on the table “for investors who are very bullish on it [expanding] its third-party platform beyond just Walmart,” which has become a key partner for Ibotta and represents much of its current revenue, said Nicholas Smith, a senior research analyst at pre-IPO research company Renaissance Capital. Given that its started trading far above its IPO price today, some critics may argue that it left too much money on the table, and could have raised more for itself.
Its successful debut marks the third major tech IPO in the United States this year, and is the third in a row to price well and immediately trade higher. It is also the first half of a pair of technology offerings that will list this month, with data management and security company Rubrik expected to list its own shares next week. The two companies follow Reddit and Astera Labs out of the private markets, after both the social media company and datacenter connectivity hardware play continue to trade above their IPO prices.
Investor eagerness for Ibotta indicates that “there is an increasing appetite for IPOs again” Smith said, “particularly in the tech space.”
Don’t pop the champagne yet for the tech IPO market coming roaring back, however. Ibotta pivoted to business sales over a direct-to-consumer model, which helped it reach profitability in recent periods. Classic tech IPOs tend to feature tech companies still in growth mode and deeply in the red.
Rubrik could be a better test of IPO appetite. Its products are in the data management and security worlds, and the company is deeply unprofitable and growing more slowly than Ibotta. That said, it does have a strong cloud revenue story to tell. If its debut goes well, we could see more yet-unprofitable unicorns try a shot at the public markets.
Smith agrees, calling the upcoming Rubrik IPO “an even bigger test” for tech debuts “given its weaker current financial picture.”
We’ll find out next week.
Carta, an ambitious 12-year-old Silicon Valley outfit, has gone through numerous iterations over time, originally inviting investors, startups, and employees to use its software to manage their cap tables and later aspiring to evolve into a “private stock market for companies,” as founder Henry Ward once told TechCrunch. As he explained back in 2019: “Now that you have this network of companies and investors all on one platform and the ability to transfer securities, you can build liquidity on top of it.”
The strategy boosted Carta’s valuation in recent years. But a prominent customer is now accusing Carta of misusing sensitive information that startups entrust to the company in pursuit of its own ambitions. The claim is raising wider questions about how Carta operates, even as Carta argues the incident was isolated.
On Friday, Finnish CEO Karri Saarinen posted on LinkedIn that he had received surprising news about Linear – the project management software company he co-founded four years ago and that raised $35 million in funding this fall. Linear is a Carta customer, and according to Saarinen, earlier on Friday, without his consent or knowledge, a representative from Carta reached out to an angel investor in Linear, telling the individual that Carta had a “firm buy order” from either an individual or an institution — the Carta representative didn’t say — at a specific price, though this buyer might be willing to “flex higher,” said the Carta employee in an email.
As it turns out, that angel investor is related to Saarinen and immediately alerted him to the email outreach. Clearly feeling betrayed by Carta, Saarinen wrote on LinkedIn, “This might be the end of Carta as the trusted platform for startups. As a founder it feels kind shitty that Carta, who I trust to manage our cap table, is now doing cold outreach to our angel investors about selling Linear shares to their non disclosed buyers.” Continued Saarinen, “They never contacted us (their customer) about starting an order book for Linear shares. The investor they reached out to is a family member whose investment we never published anywhere. We and they never opted in to any kind of secondary sales. Yet Carta Liquidity found their email and knew that they owned Linear shares.”
The post took on a life of its own – thousands have “liked” it and it has drawn nearly 800 comments – before Ward waded into the conversation to apologize. Ward also said the email to the Linear investor was not something that Carta condoned. Wrote Ward: “Hii Karri and everyone, I’m appalled that this happened. We are still investigating but it appears that Friday morning an employee violated our internal procedures and went out of bounds reaching out to customers they shouldn’t have. This impacted Karri’s company and two other companies. We have contacted the other two companies and are continuing to investigate. If you have any other information please reach out to me directly at [email protected] to let me know while we continue our investigation.”
TechCrunch reached out to Ward for more information yesterday; he has not responded.
Saarinen meanwhile continued to post on LinkedIn that the incident seemed anything but isolated. “So far I’ve heard from 4 of our investors who were approached with the same email. All of them were the early pre-seed investors. Also heard from 2 companies who had this happen to them. One of them a prominent AI company.”
He further posted on X that, “I’ve learned from multiple companies that this has been going on for months or even years where investors or employees of private companies are solicited by Carta employees to put their shares on sale. These people haven’t opted in to this and companies haven’t approved these sales.”
Asked for comment, Saarinen told TechCrunch via email last night that, “I’m retiring from this fight, this already has consumed too much of my time . . . My trust in Carta hasn’t recovered after talking to the CEO.” Added Saarinen, “I hope Carta takes action on these issues but likely we will be moving on to another service as we no longer have confidence in them.”
TechCrunch also reached out to numerous Carta board members to ask about the practice.
One of them, venture capitalist Matt Murphy of Menlo Ventures, echoed what Ward told Saarinen on Linkedin, writing to TechCrunch via email that: “Carta does not use customer cap table data. The cap table business and the CartaX (private stock liquidity) business are separate business units with separate teams and leadership. There was a breach of this protocol from an employee on the CartaX team that has been dealt with and which we learned from.”
Meanwhile, startup founders are following the conversation and comparing notes.
As another founder told TechCrunch this morning, “I am a customer of Carta. I just learned about all of the weird stuff going on with them going behind companies’ backs to offer secondaries. I haven’t been affected by it, but I would be furious if I learned they were peddling shares in my company without my knowledge. I am definitely considering switching platforms.”
Companies ultimately have to approve transactions relating to secondary sales, notes Murphy. In a market where few companies are getting acquired or going public, equity shareholders are more amenable than perhaps management teams would like to selling their shares. Writes Murphy, “Almost every board meeting I go to, some employee is selling stock and we have to allow, exercise our ROFR and sometimes block if we can.”
Still, he suggests, Carta’s process is fairly straightforward — and ethical. “With Carta, they have a tender product where they coordinate directly with the company to help a process they would run. Then in the case of CartaX marketplace, we verify a buyer and confirm their demand, and they we use public sources of data like Crunchbase and Pitchbook to find potential supply to match the buyer.”
For Carta, the unflattering attention it is receiving owing to its dealings with Linear is the latest in a stream of bad publicity. Last October, Ward even emailed customers, telling them that if they are concerned about “negative press” tied to the outfit, they should read a Medium post of his. The move appeared only to call more attention to the many reported problems plaguing the company.
Carta kicked off 2023 by suing its former CTO. But it has been embroiled in numerous other lawsuits over the years. In 2020, the company’s former VP of marketing sued Carta, accusing the outfit of gender discrimination, retaliation, wrongful termination and of violating the California Equal Pay Act. (TechCrunch featured that case here.) Soon after, four employees spoke on the record with The New York Times, telling the outlet that when they voiced concerns about the way the company is run, they were sidelined, demoted or given pay cuts.
The company has also been accused of poor customer service. TechCrunch year interviewed numerous Carta customers who expressed dissatisfaction with the company and its representatives. One, a fund manager who is in the midst of transitioning off the platform currently, told TC that his team had “four different account managers in the less than a two-year engagement at Carta; it certainly didn’t help with continuity and understanding of our fund and needs.”
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