For technology executives weighing market flotations for Silicon Valley start-ups, Twitter's initial public offering sent a powerful signal: Full speed ahead.
About a dozen private companies are valued at more than $1 billion, and many of them have already been holding informal talks with bankers. Now, many — including Box, Square and Airbnb — are likely to accelerate their IPO plans, according to venture capitalists.
File-sharing company Box picked Morgan Stanley, Credit Suisse and JPMorgan to lead its IPO, Reuters reported on Friday. The company has been valued at more than $1.2 billion by private venture capital investors, but it remains unclear whether it is profitable.
Twitter's lack of profits proved to be no obstacle to the micro-blogging site raising as much as $2.1 billion in its IPO. Its current share price of around $41 gives it a market value worth of $22 billion.
That opens the door for other big-name private companies including Square, the payments company founded by Twitter co-founder Jack Dorsey, which has begun exploring the possibility of an IPO next year, according to the Wall Street Journal. Profits are not expected until 2015. Square declined to comment.
Airbnb, an accommodation service, is also often cited as a potential IPO candidate. “They don't have inventory and have pretty low overhead,” said analyst Michael Pachter, who believes the company is profitable. The company declined to comment.
At Dropbox, a file-sharing service, chief executive Drew Houston said in September that his company, valued at $4 billion, has cash left from a recent fund-raising round and is in no hurry to hold an IPO.
“I'm sure we'll go public at some point, but fortunately it's not something we have to think about right now,” Houston said at a Techcrunch conference.
Social media service Pinterest, meanwhile, raised $225 million at a $3.8-billion valuation in October even though it had only begun to make money in September by showing ads. Chief executive Ben Silbermann has consistently denied that the company is considering an IPO.
Jeremy Liew, a partner at Lightspeed Venture Partners, which invested in photo-messaging application Snapchat, said Twitter was the latest company to prove to investors that social media services can eventually turn their mass audiences into reliable revenue sources, even if they have yet to turn a profit.
“Once you touch that many people, you will always figure out ways to make money,” Liew said. Snapchat is perhaps one of the furthest down the line.