Facebook's thumbs-down IPO 'forces tech firms to reassess value'
THE perceived failure of the Facebook flotation on the public markets earlier this year showed a "clear disconnect" between the private and public markets, and has forced companies to reassess their own valuation, according to the head of technology at one of the world's biggest banks.
Speaking at the Dublin Web Summit, Anthony Noto, who heads technology, media and telecoms at Goldman Sachs, said that while some tech companies have had a very successful year, others have floundered badly.
"A group of firms, like LinkedIn, Yelp, Amazon and Google have done incredibly well but then a handful are not doing well and they have clear characteristics to them. They are either going through a platform shift to mobile, or there just isn't a clear business model," he said.
While the likes of Facebook remains profitable despite losing almost half its value since going public in May, other firms like social gaming firm Zynga and voucher site GroupOn have both dealt with slumping stock prices and questions about whether they have a route to making money in the long term.
"Some companies went public too late, and perhaps should have listed two years ago, and some gone too early when they don't have a sustainable revenue model.
"That is the key for us, and while the IPO market is still very much open, it is predicated on a company having those fundamentals first," he added.
Mr Noto is considered one of the most influential figures in the technology world, and has played a key role in taking numerous firms public.
"We have noticed... there have been a lot more companies with a valuation of between $300m and $1bn who are looking to sell their business and there is a market for that now that wasn't there a couple of years ago," he said.
Meanwhile, one of the biggest venture capitalists in Europe believes it is impossible for an Irish company to be successful without moving abroad.
"I know this from experience in Sweden, that it's no good being just the biggest company in Ireland," said Skype founder Niklas Zennstrom.
"The market is just too small and that doesn't apply just to Ireland, but most other places too," he said.
Irish company pTools has secured a €1m investment to redevelop its software for cloud technology.
The funding will allow users to distribute content from the web securely across desktop, tablet and mobile platforms.