Snowflake stock soars in largest software IPO ever; Madrona among earlier venture investors

Madrona Enterprise Group’s S. Somasegar and former Snowflake CEO Bob Muglia beforehand labored collectively as Microsoft executives. (Madrona Enterprise Group Photograph)

Snowflake got here out with a bang in its public debut, elevating $3.Four billion within the largest software program IPO ever.

The information warehousing firm opened at $245/share after pricing its IPO at $120/share. Its inventory continued climbing in Wednesday buying and selling, closing at $253.93, valuing the corporate at greater than $60 billion.

The IPO is a windfall for the corporate’s buyers, together with Madrona Enterprise Group. The Seattle-based agency invested in 2017 when the corporate’s valuation was round $500 million, stated Madrona Managing Director S. “Soma” Somasegar.

“Typically you discover a workforce and a know-how that’s simply poised to take off,” Somasegar stated.

Madrona just isn’t listed in Snowflake’s IPO paperwork, because the agency owns lower than 5% of the corporate, and it didn’t disclose the worth of its stake.

The Snowflake funding was barely uncommon for Madrona, which generally invests in early-stage startups based mostly within the Pacific Northwest. However the agency has expanded its geographic attain in recent times and in 2019 launched a $100 million “acceleration fund” for later-stage corporations.

In 2017 Madrona invested in a Collection E spherical for healthcare startup Accolade, which opened a second headquarters location in Seattle in 2015. Accolade went public earlier this 12 months.

Different Madrona portfolio corporations to go public over the previous 5 years embody Smartsheet, Apptio, Redfin, and Impinj — corporations that obtained funding from Madrona of their early days.

Madrona’s funding in Snowflake represented a reunion for then-Snowflake CEO Bob Muglia and Somasegar, who labored with Muglia for a few years at Microsoft. Somasegar led Microsoft’s Developer Division, whereas Muglia was president of the corporate’s Server & Instruments Enterprise.

Muglia owns greater than Four million shares of Snowflake, or 1.7% of the corporate, after reaching a deal to promote half of his stake to Warren Buffett’s Berkshire Hathaway as a part of the IPO. The worth of Muglia’s remaining stake was greater than $1 billion as of the shut of buying and selling in the present day. (Be aware: Muglia’s stake and valuation corrected since publication to mirror Berkshire deal.)

Snowflake, based in 2012, additionally opened a brand new engineering workplace in Bellevue, Wash., a number of months previous to Madrona’s funding.

“It was nice to work with Bob and the workforce and construct up their Seattle presence and work to assist them grow to be a real multi-cloud answer,” Somasegar stated.

In July, Madrona led a $27 million spherical in Fauna, an organization based by two former Twitter engineers that’s positioning itself as a frontrunner in databases for a brand new era of purposes. Muglia is Fauna’s govt chairman.

Snowflake’s knowledge warehouse is a specialised sort of cloud database constructed for analytical purposes. The corporate has greater than 3,100 prospects together with Brex, ConAgra Meals, Domino’s, JetBlue, and Nationwide. It has greater than 20 places of work worldwide, together with the Seattle-area hub, and was probably the most beneficial non-public tech startups on the planet previous to the IPO.

Snowflake CEO Frank Slootman. (Snowflake Photograph)

The San Mateo, Calif.-based firm greater than doubled income to $242 million within the first half of 2020, with a internet lack of $171.Three million, down from $177 million in 2019.

Muglia beforehand led Snowflake as CEO for 5 years however stepped down in Might 2019. Frank Slootman, who ran ServiceNow as chairman and CEO from 2011 to 2017, now leads the corporate.

Dragoneer Funding Group — a backer of Airbnb, Slack, Spotify, Uber and different giants — led a $479 million Collection G spherical in February that included Salesforce Ventures. That spherical valued Snowflake at $12.Four billion. Different backers embody Altimeter; ICONIQ Capital; Redpoint Ventures; and Sequoia.

In its IPO submitting, Snowflake listed Amazon Internet Companies, Microsoft Azure, and Google Cloud Platform below potential danger elements to the enterprise. All three opponents provide their very own knowledge warehousing service.

Snowflake stated a considerable majority of its enterprise runs on AWS. CNBC reported Wednesday that the corporate’s ties to Amazon “current a long-term danger to IPO buyers,” due partially to Amazon’s competing Redshift product.

Snowflake is one in every of a number of tech corporations to file for an IPO this 12 months regardless of the continuing pandemic and financial disaster, with many buying and selling greater since debuting on the general public markets. Others together with DoorDash, Airbnb, and extra are anticipated to go public quickly. “It’s bonanza time in Silicon Valley and on Wall Avenue,” reported The New York Instances.

Right here’s different commentary on the IPO from Wednesday:

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