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ServiceTitan’s IPO is a big winner that could inspire fintechs
By Julie Bort @julie188 December 12, 2024
ServiceTitan, which offers financial and customer management software for the trades, has gone public in a major way. The stock quickly shot up from its opening IPO sales price of $71 million to $105 a share in modest trading volume. It is currently maintaining an above-$100 price.
While ServiceTitan’s success does not necessarily guarantee the reopening of a painfully tight IPO window for tech companies waiting in the wing to go public, it may still have positive implications for fintechs. This is because its motive to go public was not driven by market conditions but rather to pay off some of its venture investors pronto.
ServiceTitan disclosed that it needed to settle with some of its investors after it entered into painful terms when it previously raised money. The company agreed to pay some investors increasing penalties, in the form of more stock, every quarter it delayed an IPO after May 22, 2024. They paid $84.57 a share, and ServiceTitan would have had to IPO at around $90/share to avoid those penalties.
The company also dedicated about $311 million of the IPO money to buy back all the shares of its non-convertible preferred stock at $1,000 a share, the price these investors paid, plus pay them some hefty dividends. While the $71 million IPO sales price likely wasn’t enough to avoid these penalties, it was still healthy enough to serve much of ServiceTitan’s needs.
It allowed the company to raise around $625 million – and possibly up to $718.5 million if its bankers exercise their full option to buy all the shares allotted to them. After paying off its investors, the company will still have a handsome coffer to use for operations, acquisitions, or other needs.
Source: techcrunch.com
