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To IPO or not to IPO?  5 Reasons to Go Public  and 5 Reasons to Stay Private
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By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents the PEC tokens, as described in The Elephant's White Paper have not been registered under any securities laws in any jurisdiction (together with the Act, the “Securities Laws”), but rather are being and will be allocated by The Elephant pursuant to exemptions from registration under the Securities Laws.

Accordingly, the undersigned gives the following representations and warranties:

• It has the knowledge and experience in financial and business matters required to receive and use the PECs and/or services to be made available by THE ELEPHANT, as described in the White Paper, as amended from time to time, and as such it is capable of evaluating the merits and risks involved with them.

• The purpose of this declaration is to enable THE ELEPHANT and its affiliates to discharge its responsibilities under such exemptions and that THE ELEPHANT will rely upon the information contained herein, and therefore, the representations herein are complete, accurate and binding, and may be relied upon by THE ELEPHANT and its affiliates.

• Although THE ELEPHANT will use their best efforts to keep this letter strictly confidential, they may present this declaration and any other information which the undersigned has provided to them to such parties as they deem advisable if called upon to establish the availability under the Securities Laws of an exemption from registration of the offer and sale of the PEC or any other service to be made available by THE ELEPHANT, as described in the White Paper, as amended from time to time, or if the contents thereof are relevant to any issue in any action, suit or proceeding to which THE ELEPHANT or its affiliates is a party or by which they or it are or may be bound.

• Any offer or services that may be made available to the undersigned by THE ELEPHANT or its affiliates (i) will not constitute a violation of any laws or regulations, including the Securities Laws and investment advice laws, of any applicable jurisdiction; (ii) will be permissible under all applicable Securities Laws and shall not trigger any licensing, registration, or other requirements.

• It shall not transmit or otherwise send any information to which THE ELEPHANT will give it access to, to any person in any jurisdiction in which the distribution of such information and/or the offering or services to be offered by PEC are not authorized, or to whom such offer or invitation may be unlawful.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is a “sophisticated investor” or a “professional investor” and a “wholesale client” (and not a “retail client”) as defined under the Corporations Act (Cth) 2001

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that:

1. Any fiat currency used by the undersigned in connection with the offering and services to be made available by The Elephant, as described in its White Paper and associated commercial terms, as changed from time to time, is legally owned by the undersigned and not raised from any other parties.

2. In respect of the transaction made in connection with these offering and services, it has not obtained any access to the relevant transaction information in a press release, conference, advertisement, announcement, professional or trade publication or marketing materials within the People’s Republic of China.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it has made appropriate enquiries and has full knowledge of the nature, rights and obligations arising out of the offering or the services made available by The Elephant, as described in its White Paper and associated commercial terms, as changed from time to time, and obligations applicable to it under the laws of the Arab Republic of Egypt, and will not make any offerings, disposals, investments or otherwise transact with regard to offering or the services made available by The Elephant in case such offering, disposal, investment or other transaction is in contravention to the laws, regulations, governmental circulars and decrees of the Arab Republic of Egypt.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is located or resident in the European Economic Area (the “EEA”), it is a “qualified investor” within the meaning of the law in any member state of the EEA which has implemented the Directive 2003/71/EC, and amendments thereto, including Directive 2010/73/EC (the “Prospectus Directive”), implementing Article 2(1)(e)(i), (ii) or (iii) of the Prospectus Directive.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is a “qualified investor” within the meaning of Directive 2003/71/EC, as amended, and it professionally or commercially purchases or sells securities or investment products (Vermögensanlagen) within the meaning of the German Investment Product Act (Vermögensanlagengesetz) for its own account or for the account of others.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is a “qualified investor” as such term is defined in the Prospectuses Act 2005 of Gibraltar (as amended) and in Directive 2003/71/EC. It is a “professional client” as such term is defined in the Financial Services (Markets in Financial Instruments) Act 2006 of Gibraltar; and that it has not requested “non-professional treatment” within the meaning of Schedule 2 of the Financial Services (Markets in Financial Instruments) Act 2006 of Gibraltar.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is a professional investor (as such term is defined in Part 1 of Schedule 1 to the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong)).

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE WILL BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is:

1. An Investor to which at least one of the categories set forth in the First Addendum to the Israeli Securities Law, 1968 (the "Securities Law") and as listed below apply (a "Sophisticated Investor"); and

2. aware of the implications of being a Sophisticated Investor, and agree thereto.

The categories are:

1. A Joint Investment Trust Fund, as such term is defined in the Joint Investments Trust Law, 1994, or a management company of such a fund;

2. A Provident Fund or a Management Company as such terms are defined in the Control of Financial Services Law (Provident Funds), 2005;

3. An Insurer, as defined in the Insurance Supervision Law, 1981;

4. A Banking Corporation or an Auxiliary Corporation, as such terms are defined in the Banking (Licensing) Law, 1981, other than a joint services company, acquiring for their own account or for the account of clients which are investors who fall within the categories listed in Section 15A(b) of the Securities Law;

5. A Portfolio Manager, as such term is defined in Section 8(b) of the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (the "Investment Advice Law"), acquiring for its own account or for the account of clients which are investors who fall within the categories listed in Section 15A(b) of the Securities Law;

6. An Investment Adviser or an Investment Marketer, as such terms are defined in Section 7(c) of the Investment Advice Law, acquiring for its own account;

7. A member of the Tel Aviv Stock Exchange acquiring for its own account or for the accounts of clients which are investors who fall within the categories listed in Section 15A(b) of the Securities Law;

8. An Underwriter, as such term is defined in section 1 of the Securities Law, that meets the qualifying conditions according to Section 56(c) of the Securities Law, acquiring for its own account;

9. A Venture Capital Fund; for this purpose, a “Venture Capital Fund” means a body corporate the main activity of which is investment in bodies corporate whose main activity, at the time of the investment, is research and development or the production of innovative and knowhow intensive products or processes, investment in which involves greater risk than what is customary in other investments;

10. A body corporate wholly owned by investors that fall within the categories listed in section 15A(b) of the Securities Law;

11. A body corporate, other than a body corporate incorporated for the acquisition of securities from a certain offer, with an equity capital in excess of NIS 50 million;

12. An individual, investing for his or her own account:

a. The total value of his or her Liquid Assets exceeds NIS 8 million;

b. His or her annual income in each of the previous two years exceeds NIS 1.2 million, or 1.8 million for a Family Unit; or

c. The total value of his/her Liquid Assets exceeds NIS 5 million and his/her annual income in each of the previous two years exceeds NIS 600,000 for an individual, or NIS 900,000 for a Family Unit.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is a “wholesale investor” as that term is defined in clauses 3(2)(a), (c) or (d) of Schedule 1 to the Financial Markets Conduct Act 2013 of New Zealand (“FMC Act”), being a person who is

☐ an “investment business”;

☐ “large”; or

☐ a “government agency”,

in each case as defined in Schedule 1 to the FMC Act.

2. The undersigned understands the consequences of certifying itself to be a wholesale investor.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is an “institutional investor” as defined under the Decree-Law 1 of 1999 and Accord 1 of 2001, both as amended, in relation to whom the registration of the securities to be offered and sold is not required. Pursuant to the foregoing, the undersigned (i) is a legal entity, validly formed and in existence, (ii) has participated, on a regular basis, in at least the previous two years, in the administration of investments substantially similar to those described in The Elephant White Paper, (iii) has a net worth of at least one million dollars, (iv) has key executives or, a majority of its directors and officers, that have at least two years of experience in the regular administration of investments and (v) does not require the protection of the provisions set forth in the securities laws of the Republic of Panama.

The undersigned acknowledges that the securities have not been registered under the Panamanian securities laws and regulations and may not be offered or sold within Panama except pursuant to an exemption from, or in transactions not subject to, the registration requirements of the Panamanian securities laws and regulations.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is a “qualified investor” within the meaning of the Federal Law of the Russian Federation “On Securities Market” No. 39-FZ dated April 22, 1996, as amended, (ii) the execution and performance of the offering and services to be made available by The Elephant, as described in its White Paper and associated commercial terms, as changed from time to time, do not violate applicable laws of the Russian Federation and (iii) in making any payments in connection with offering and services, it has complied or will comply with the requirements of all applicable laws of the Russian Federation, including with respect to foreign currency transactions. The undersigned acknowledges that the The Elephant is relying in part upon the truth and accuracy of, and the undersigned's compliance with, the representations, warranties, agreements, acknowledgements and understandings of the undersigned set forth herein in order to determine its eligibility to gain access to as PrivatEquity's offering and services, as described in its White Paper and associated commercial terms, as changed from time to time and the undersigned is aware of the legal consequences of the foregoing.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE WILL BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is either an “institutional investor” as defined under Section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”) or a “relevant person” as defined under Section 275(2) of the SFA (including an “accredited investor” as defined under Section 4A(1) of the SFA).

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is an “investment professional” within the meaning of Article 11(1) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act of South Korea.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is a “qualified investor” within the meaning of the Swiss Collective Investment Schemes Act of June 23, 2006, as amended, its implementing ordinance and regulatory guidance.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is located or resident in the United Kingdom, it is a person of a kind described in Articles 19 and/or 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), or that the offering or the services made available by The Elephant, as described in its White Paper and associated commercial terms, as changed from time to time, may otherwise be lawfully distributed to it pursuant another applicable exemption under the Order.

The undersigned acknowledges that these offering and services are only directed at (i) persons who have professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Order, (ii) high net worth entities (including companies and unincorporated associations of high net worth and trusts of high value) or other persons falling within Article 49(2)(a) to (d) of the Order, and (iii) persons to whom such offering and services may otherwise be lawfully distributed.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents that it is an “accredited investor” (an “Accredited Investor”) as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, for one or more of the reasons specified below:

 Where the undersigned is a natural person:

 He or she has an individual net worth, or joint net worth with my spouse (determined by (i) subtracting total liabilities from total assets, and (ii) excluding the value of my primary residence), in excess of $1,000,000; and/or

 He or she had an individual income in excess of $200,000 (or a joint income together with my spouse in excess of $300,000) in each of the two most recently completed calendar years, and reasonably expects to have an individual income in excess of $200,000 (or a joint income together with my spouse in excess of $300,000) in the current calendar year.

 Where the undersigned is or acting on behalf of:

 a corporation, partnership, limited liability company or similar business trust or organization described in Section 501(c)(3) of the Internal Revenue Code not formed for the specific purpose of acquiring the Tokens that has total assets in excess of $5,000,000;

 a bank as defined in Section 3(a)(2) of the Securities Act, a savings and loan association, or other institution defined in Section 3(a)(5)(A) of the Securities Act acting in either its individual or fiduciary capacity (this includes a trust for which a bank acts as trustee and exercises investment discretion with respect to the trust’s decision to invest in the Token);

 a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended;

 an insurance company as defined in Section 2(13) of the Securities Act;

 an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), or a business development company as defined in Section 2(a)(48) of the Investment Company Act;

 a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended;

 a plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions, for the benefit of employees, having total assets in excess of $5,000,000;

 an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (a) for which the investment decision to acquire the Tokens is being made by a plan fiduciary, as defined in Section 3(21) of ERISA, that is either a bank, savings and loan association, insurance company, or registered investment adviser, (b) which has total assets in excess of $5,000,000, or (c) which is self-directed, with the investment decisions made solely by persons who are Accredited Investors;

 a private business development company defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended;

 a trust not formed for the specific purpose of acquiring the Tokens with total assets in excess of $5,000,000 and directed by a person who has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of investing in the Tokens;

 a revocable trust (including a revocable trust formed for the specific purpose of acquiring the Tokens) and the grantor or settlor of such trust is an Accredited Investor; and/or

 an entity in which each equity owner is an Accredited Investor.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents the PEC tokens, as described in The Elephant's White Paper have not been registered under any securities laws in any jurisdiction (together with the Act, the “Securities Laws”), but rather are being and will be allocated by The Elephant pursuant to exemptions from registration under the Securities Laws.

Accordingly, the undersigned gives the following representations and warranties:

• It has the knowledge and experience in financial and business matters required to receive and use the PECs and/or services to be made available by THE ELEPHANT, as described in the White Paper, as amended from time to time, and as such it is capable of evaluating the merits and risks involved with them.

• The purpose of this declaration is to enable THE ELEPHANT and its affiliates to discharge its responsibilities under such exemptions and that THE ELEPHANT will rely upon the information contained herein, and therefore, the representations herein are complete, accurate and binding, and may be relied upon by THE ELEPHANT and its affiliates.

• Although THE ELEPHANT will use their best efforts to keep this letter strictly confidential, they may present this declaration and any other information which the undersigned has provided to them to such parties as they deem advisable if called upon to establish the availability under the Securities Laws of an exemption from registration of the offer and sale of the PEC or any other service to be made available by THE ELEPHANT, as described in the White Paper, as amended from time to time, or if the contents thereof are relevant to any issue in any action, suit or proceeding to which THE ELEPHANT or its affiliates is a party or by which they or it are or may be bound.

• Any offer or services that may be made available to the undersigned by THE ELEPHANT or its affiliates (i) will not constitute a violation of any laws or regulations, including the Securities Laws and investment advice laws, of any applicable jurisdiction; (ii) will be permissible under all applicable Securities Laws and shall not trigger any licensing, registration, or other requirements.

• It shall not transmit or otherwise send any information to which THE ELEPHANT will give it access to, to any person in any jurisdiction in which the distribution of such information and/or the offering or services to be offered by PEC are not authorized, or to whom such offer or invitation may be unlawful.

PLEASE NOTE EXTERNAL CONFIRMATION AND/OR EVIDENCE MAY BE REQUIRED BEFORE THE ACCREDITAION PROCESS IS COMPLETED

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By filling in this form and selecting the 'I confirm' button below, the undersigned hereby confirms and represents the information above does not qualify as a recommendation or an opinion with regard to conducting any transaction or investment. Each investor should conduct his or her own checks and verifications, while taking into account his or her specific circumstances and requirements. All the relevant aspects of the purchase, including the legal, economic and tax aspects, should be carefully examined with the assistance of professionals and consultants on the investor’s behalf.

The information above or on the site and the blog does not qualify as an offer of investment and is meant for general information only. Offers for selling of the securities will be delivered only to ‘Accredited Investors‘ as defined in the first supplement of the Israeli Securities Law, 5728-1968. The Elephant, shall not be responsible or liable and shall not guarantee in any way the return of the investments to investors, including any profits earned as a result of such investments. The engagement with the investors shall be in accordance with the transaction documents and the conditions stipulated therein, subject to the negotiations that will be held with the investors.

The Elephant charges fees from sellers and buyers of securities, and therefore The Elephant has an interest in the information posted about various companies.

The information published on the Site, does not constitutes an investment consulting as defined in the Regulation of Investment Consulting, Investment Marketing and Portfolio Management, 1995, and the said information is not a substitute for professional consulting which among others takes into consideration the special needs of every person.

For those who are considering making an investment (including sale and purchase of securities) via the website, can apply different laws deriving from their residence or citizenship, including tax laws, laws relating to the statement or report on investment activity, laws relating to the eligibility of investing, regulatory issues in process and so on. Therefore, those who are considering making such an investment, undertake to examine the applicability of any applicable laws, as they are committed to take all necessary action in order not to violate the said laws, including to disclose fully and fairly in relation to any investment to any local lawfully authority, as the law requires such disclosure.

We welcome you to The Elephant Investors Community, your gateway to the Secondary Market.

Note:
The provision of information in this website is not based on your individual circumstances and should not be relied upon as an assessment of suitability for you of a particular product, service, or transaction. It does not constitute investment advice, tax advice or legal advice and The Elephant Platform makes no recommendation as to the suitability of any of the products, services or transactions mentioned herein. The information included in this website is intended to “Accredited Investors” only, as this term is defined in the jurisdiction in which they reside (or such similar term in such jurisdictions financial regulations). Non-Accredited investors may not partake in any products, services or transactions mentioned herein or offered by The Elephant.


* Please note that the purchase of the shares of any Target Company may be subjected to right of first refusal of other shareholders, in some cases also to approval of the Target Company’s board of directors or other transfer restrictions as may be applicable.

To IPO or not to IPO?  5 Reasons to Go Public  and 5 Reasons to Stay Private
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Note:
For those who are considering making an investment (including sale and purchase of securities) via the website, can apply different laws deriving from their residence or citizenship, including tax laws, laws relating to the statement or report on investment activity, laws relating to the eligibility of investing, and so on. Therefore, those who are considering making such an investment, undertake to examine the applicability of any applicable laws, as they are committed to take all necessary action in order not to violate the saids laws, including to disclose fully and fairly in relation to any investment to any local lawfully authority, as the law requires such disclosure.

To IPO or not to IPO? 5 Reasons to Go Public and 5 Reasons to Stay Private

There may never be a perfect time to talk about the prospects of Tech IPOs, but these days are particularly complex for tech companies to go public. It’s a year that both Snap and Blue Apron would like to forget, after losing 38% and 24% of their IPO share price, respectively, but they are not the only ones. Almost every tech company that chose to go public in New York during the last 12 months is now traded below its share price at the IPO: Apptio (-22.4%), Cloudera (-8.3%), Okta (-1.3%), and Yext (-1.2%) are just several examples. Only one tech IPO turned out to be a success story, the adtech firm Trade Desk that went up by almost 72% and is now traded at app. $2.1B. Also worth mentioning is, application network company, Mulesoft that has gained some positive momentum (up 4% from its IPO share price) in the public market.

 

Therefore, it is no surprise that unicorns such as Dropbox, Spotify, Airbnb and even Uber have postponed their plans to go public. Other unicorns, such as WeWork, Lyft, Pinterest, and Houzz, walked the road most taken, and recently turned to the private investment market to raise hundreds of millions of dollars at skyrocketing valuations. Will they ever go public? Does staying private forever pay off? Here are five reasons why you should take your company public, and five reasons not to do so and keep it hidden under the obscurity of the private market.

 

5 Reasons to Go Public

 

1.     Because it is a great way to raise money and sense of credibility in the market: When the private investment market cools off, the public market as an arena to raise funding becomes even more relevant. In fact, the stock market was created in the first place as an arena to give companies exposure to financing from the general public. To date, it is a powerful vehicle to raise large amounts of money and to expand the business when profits cannot support the expansion or the speed in which the company wishes to expand. A public company gains a greater deal of “legitimacy” and also a greater exposure profile, as the company is on the radar of analysts and reporters. However, in order to raise money in the public market, you need to convince the public market in your ability to consistently grow on a steady basis and show a clear track to profitability.

 

2.     Because investors and employees seek liquidity: Since it is customary to grant shares to employees in tech companies, an IPO is a necessary step to release pressure from employees as well as investors (especially early stage), who hold shares and options, to provide liquidity. Google and Facebook’s IPOs produced thousands of millionaires within a few months after going public. Facebook even created eight billionaires resulting from its IPO, including Dustin Moskovitz, Eduardo Saverin, and Sheryl Sandberg. However, you need to take into consideration, that not every public company is Google or Facebook, so when the stocks’ price goes below its price at the IPO, and many times, soon after the IPO, the stock price declines maybe even dramatically, which does limit the financial benefit from such liquidity.

 

3.     Because eventually, your investors will take you there: Uber has once been the prototype of the unicorn that stays private forever. Reaching almost a $70B valuation at the peak, it was an example of a tech giant that disregards the public market in its way to take over the world, leaving behind public automotive companies such as Ford, General Motors, and Tesla, who are traded at a lower valuation. Now, Uber’s investors are trying hard to turn the ship around and aim to an IPO. Uber’s board has taken corrective steps to clean up its corporate culture, showing the CEO Travis Kalanick the door. Also, the board has put some pressure on the company to settle the lawsuit from Waymo, and reduce expenses. Losses went down in the first quarter of the year from $991 million in the last quarter of 2016, to $708 million. An IPO is still not yet imminent, but the investors will seek a new CEO that will make that happen.

 

4.     Because you may have a healthy monopoly in your hands: If your company enjoys being the first and the only player in the market, and it can set its prices, you have, congratulations – a monopoly. Being a monopoly is a privilege that so few in the tech market are enjoying, so feel lucky if you’re one of them.  You don’t have to be profitable in order to go public because you enjoy a high level of growth and can commercialize your user base quickly. Eventually, even monopolies can’t ignore the stock market, and are better off using it to their advantage as it helps them grow even faster and ease investors’ and employees’ pressure to create liquidity, as was the case with the monopolies we know today: Google, Facebook, Microsoft, Amazon and Alibaba.  If you want to assess the level of competition around you, ask Nigel, the digital company analyst, designed by Zirra. Zirra is a company that develops A.I. and NLP-based technology for company and market analysis that we, at Thelephant.io, work with to provide analysis on private companies listed on our trading arena. Asking Nigel about the competition will result in a list of companies rated from zero to one. The number indicates how closely those companies are related to each other on the multidimensional semantic model. Scores of above 0.5 are almost always direct competitors, while a score of 0.3-0.5 tells about some relationship, although it is often mild competition.

 

5.     Attracting talents without paying high in stock and minimizing dilution to shareholders: In order to attract new high-level employees and talents, public companies with cash at hand can offer less stock options as an incentive since they since they already have liquidity for these options and in addition they can offer a more cash based compensation package, thus limiting the number of options to be granted, and the dilution to existing shareholders. In a private company, where there is a liquidity risk, the number of options that need to be granted is higher, which leads to greater dilution to the existing shareholders.

 

5 Reasons to Stay Private

 

1.     As a public company, your company’s valuation depends too much on meeting your projections, the market’s mood, and not always on your own actions: Following Snap and Blue Apron’s crash on the stock market in the recent weeks, companies such as Airbnb, Dropbox, and even Uber are now considering to postpone their IPO due to the negative sentiment in the IPO market. Dick Costolo, Twitter’s former CEO, recently said in an interview that he expects two more years of declining valuations at the IPO stage. Moreover, he said that “lots of money in the private market chases few deals”, and driving up prices. It also very much depends on timing; Blue Apron’s IPO could have seen better days had Amazon not chosen to acquire Whole Foods at the same time. If, as a public company you do not meet your projections you are “punished” immediately as investors and shareholders follow your reports. When you are a private company you may have time to correct this before the public or even your own shareholders are exposed to the news. Once you have a negative sentiment in your stock price and investors are “dumping” your shares, it is difficult to turn this in the positive direction.

 

2.     Because your company is far from being profitable, suffering from fierce competition and is seeking rapid expansion:  Most of the startups, let’s face it, are suffering fierce competition and are raising large amounts of money to acquire users and customers to maintain growth. Snap and Blue Apron carried their IPO counting on growing significantly within a year, but failed to fulfil the same level of growth afterwards. In fact, there were a few signs showing a slow-down in their growth at the time of IPO. Blue Apron had suffered from a sharp increase in the cost of acquiring new customers in 2016, and at the same time suffered from a sharp decline in the life time value of each customer that spends less and less on Blue Apron’s meal kits. At the same time, the company suffered from a fierce competition from dozens of meal kit delivery companies such as Hello Fresh and Plated.  In other words, if you’re not a Peter Thiel-style technology monopoly such as Facebook or Google in their first years, growing fast alone in a blue ocean of opportunities, think twice before going public.

 

3.     Because you can raise money in ICO: Some private companies are taking the idea of Initial Coin Offering (ICO) seriously as a way to create liquidity, yet staying private. Take social company Kik as an example. Kik would like to sell 10% of its currency (called Kin) to investors and 20% on a yearly basis to developers who help build up Kik currency’s economy. The ICO’s success depends on the extent to which the currency becomes self-sustaining, so that the stake in the hands of Kik being more valuable than the potential exit valuation of the company. But in order for Kik to get a high valuation, Kin’s market cap should be as high as billions of dollars. The chances of Kin to be valued among the highest currencies such as Litecoin ($2.5B at the time of writing), Ripple ($8.3B), Ethereum ($20.9B) or Bitcoin ($40B) are not necessarily high. Cryptography has its own challenges such as high volatility and low reliability.

 

4.     Investor relations are a hassle: that diverts you from managing the company – to managing public investors: CEOs are requested to spend time with their investors, many of them request face time. Staying private, means less investors and more autonomy in the company’s management.

 

5.     Liquidity in the secondary market: For private companies’ shareholders, it is becoming increasingly accessible to achieve liquidity via the secondary market. While VCs and investors sell their shares to secondary funds, entrepreneurs and employees are using more and more the secondary market to sell their stocks in pre-IPO private tech companies. Recently, this process was simplified and more accessible by the rise of peer-to-peer platforms. We at Thelephant.io directly connect shareholders of tech companies with accredited investors, without the need to go through corporate management. We allow more shareholders (mainly employees, former employees and early stage investors) to enjoy an earlier exit and will help democratize the tech industry, allowing more people to enjoy the wealth created by it.

 

The stock market is a great mechanism to raise money, but the success of an IPO depends on many factors some of which may not be controlled by the company and may not even be related to the company. A negative market sentiment, a lack of analysts that comprehend technological trends and disruptions, and an excessive need for investor relations, can turn the IPO into a nightmare. At the same time, an abundance of private equity and VC funds hungry for investments can cause growth companies to postpone their IPO even further.

 

Here is a short list of giants that have never been to an IPO, yet they manage their business successfully: Koch Industries ($100B), PWC ($35.4B),  Mars ($33B), Deloitte ($35.2B), E&Y ($28.7B), Fidelity ($15.9B), Toys`R`Us ($11.8B).

 

Therefore, each company should consider carefully what the correct path is for itself, based on its specific needs and situation, and to re-consider this on a regular basis, as market sentiment is flexible. While the timing may not be right now, that is not to say that it will not be so soon after.

 

Written by Thelephant with the assistance of Zirra Analysts

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