Glassdoor Raises $40 Million Amid Investor Skepticism
June 03 2016 - 8:10AM
Dow Jones News
Glassdoor Inc. has raised $40 million in a funding round that
has lowered its share price, reflecting a shift by venture-capital
investors to push back on the values of even promising
startups.
Mutual fund giant T. Rowe Price led the funding for the online
jobs and recruiting site, which enables employee reviews of
employers. The stake brings Glassdoor's total capital raised to
about $200 million while adding an institutional investor to a
roster that includes Google Capital, Tiger Global and Battery
Ventures.
Glassdoor's "post-money" valuation edged higher from a year ago
when it was worth close to $1 billion, according to a person
familiar with the matter. But the price of its shares fell 6.3%, to
$8 from $8.54, from the company's previous round of funding.
"We view this as a slight up round," said Robert Hohman,
Glassdoor's chief executive, saying the company's market
capitalization had increased. The standard definition of a down
round is the decline in a company's share price.
Many private tech companies, including delivery service DoorDash
Inc. and database startup Couchbase Inc., have recently sold their
shares at lower prices as investors have widely pushed back on
private company valuations that soared during 2014 and 2015, often
to levels far surpassing publicly traded peers.
Glassdoor shares, despite their 6.3% decline, significantly
outperformed shares of publicly traded comparable LinkedIn Corp.,
which have fallen 37% in the same time frame, though the Nasdaq has
risen 4%.
Unlike some other companies, Glassdoor didn't agree to onerous
investment terms such as "ratchets" provisions or senior
liquidation preferences to boost its share price artificially.
Mr. Hohman said the company plans to use the new funding to
invest in product development, marketing and international
expansion.
Some public companies that specialize in user-generated reviews,
including Angie's List Inc. and Yelp Inc., have seen their share
prices decline. Mr. Hohman said Yelp has struggled because the
company specializes in selling to smaller accounts and Angie's List
because it charges for reviews.
An Angie's List spokeswoman said the company plans new
membership levels, including one that provides access to reviews at
no charge. Yelp said in a May earnings conference call that about
20% of its first-quarter revenue came from larger "chain and
franchise businesses."
Glassdoor, Mr. Hohman said, is more like TripAdvisor Inc.
because both companies sell to larger enterprises, in Glassdoor's
case to companies that want to sponsor pages on the site and buy
ads to promote job openings to potential hires. Mr. Hohman said
Glassdoor has 4,000 corporate customers and that it doesn't charge
for people to read reviews because such information "wants and
needs to be free."
Neeraj Agrawal, a general partner at Battery Ventures, which has
invested in Glassdoor, said the fundraising environment has changed
substantially since 2013 to 2015, when "you saw relentless focus on
growth at all costs," a period he called "pretty anomalous." Now,
he said, "the pendulum swings from one side to the other."
One reason his firm remains bullish on Glassdoor is because he
thinks millennials will want more information when they are making
career decisions, he said. Before Glassdoor, "if you were flying
out to Seattle to interview with Microsoft, you could find out more
information about your hotel than about the company you're
interviewing with," he said.
By taking money from T. Rowe Price, Glassdoor will be exposing
itself to an extra level of public scrutiny: mutual funds publish
estimated share prices for their private tech holdings. Many
companies have seen estimates of their share price reduced
substantially, a fact that has surprised some private tech CEOs,
and can lead to uncomfortable conversations with employees who are
paid with shares or complicate deal negotiations.
Mr. Hohman said he was happy to have T. Rowe Price as an
investor because of its "long-term" focus. As far as having an
estimate for his share price published, he said private companies
should get used to more scrutiny. "That's life in the big city—your
share price is public. Get used to it."
When asked about Glassdoor's share price, and the fact that it
had fallen from the prior funding round, Mr. Hohman declined to
discuss it.
Write to Rolfe Winkler at rolfe.winkler@wsj.com and Tomio Geron
at tomio.geron@wsj.com
(END) Dow Jones Newswires
June 03, 2016 07:55 ET (11:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Linkedin Corp. Class A (NYSE:LNKD)
Historical Stock Chart
From May 2024 to Jun 2024
Linkedin Corp. Class A (NYSE:LNKD)
Historical Stock Chart
From Jun 2023 to Jun 2024