Rally’s $84M IPO, NexGen’s $119M Exit Made Quarter One to Remember
The Spring of 2013 will go down in the history of Colorado’s tech community as one to remember, with a breakthrough IPO, a nice exit for a leader in the historically vibrant data storage industry, major investment in two startups, and new life for one of the area’s leading biotechs.
Here’s a quick recap of what we think are the five top stories of the recently completed quarter.
RALLY’S RISE: Rally Software Development kicked the quarter off right with an $84 million IPO on April 12. A team of Rally execs led by CEO Tim Miller and founder and chief technology officer Ryan Martens made the trip to Wall Street, rang the bell to open the New York Stock Exchange, and watched the shares of their company immediately jump 30 percent above the $14 per share it was priced at.
But that was just the start of it. The stock continued its strong performance, closing the quarter at $24.82. The boost came after Rally posted higher than expected revenue in its debut earnings report. Rally’s market cap is now $560.6 million.
Rally (NYSE: RALY) has deep roots in Boulder. Martens founded the company, then known as F4 Technologies, in 2001. The company grew into one of Boulder’s leading tech companies, and it announced last week it will expand its headquarters in the city.
The company also has deep ties to investors in the community, with much of the early VC support coming from local firms. Mobius, Boulder Ventures, and Vista Ventures were investors.
Rally’s IPO and subsequent success is emblematic of several concurrent trends, including the return of mid-sized IPOs for software companies. Locally, Rally’s success means something more, as the company is the first Colorado software firm to go public in a long time. Rally’s success shows that companies can mature from startups into successful public companies without having to leave home.
NEXGEN SNAPPED UP: NexGen Storage might have been another one of those companies. We won’t know, though, because Fusion-IO (NYSE: FIO) snapped up the Louisville, CO-based data storage company for $119 million in mid-April.
Despite only being founded in 2010, NexGen had a solid legacy in Colorado’s data storage and networking industry, a sector that helped establish the tech industry in the Boulder area. NexGen was founded by veterans of LeftHand Networks, which HP bought in 2008 for $360 million.
For the record, NexGen wasn’t the only Louisville-based company snapped up this year. In February, F5 Networks bought LineRate Systems for a reported $125 million. LineRate develops software-defined networking technology.
Grotech historically had focused on companies in the mid-Atlantic states, but Denver-based general partner Joe Zell has expanded the firm’s reach and created a solid record of success. Grotech was an investor in NexGen Storage, and it also has a major investment in LogRhythm, a growing Boulder-based network security company that’s on the short list of Colorado companies headed for IPOs or substantial exits. Grotech’s other current local investments include Plink, TapInfluence (formerly known as BlogFrog), Spot Right, and GutCheck.
Grotech has been on a roll in Colorado, with two notable exits in 2012: Aztek Networks, a telecom equipment maker, was bought by Genband, and Collective Intellect, a cloud-based social intelligence platform, was bought by Oracle. Each startup was based in Boulder and bought for an undisclosed price.
BIG ROUNDS: By the standards of Silicon Valley or the East Coast, investments in Colorado startups usually are bargains. A couple million in the Series A round followed by a few million more in the Series B round gets you pretty far in this area.
Datalogix creates and maintains huge databases about consumer behavior and real-world purchasing decisions. According to reports, the Westminster-based company is working closely with Facebook to improve the social network’s performance for advertisers. The Series A round Datalogix closed in 2009 was $15 million.
WellTok is a health IT startup that is developing a social network and game platform to encourage healthier living. WellTok has raised a total of $26 million. The company also announced a major addition to its leadership when Jeff Margolis became its CEO. Margolis founded TriZetto, one of the largest heathcare IT companies, and took it public before it was bought in a $1.4 billion leveraged buyout.
BOOSTER SHOT: The quarter’s biggest winner, though, might be Boulder-based biopharma Clovis Oncology (NASDAQ: CLVS), which went from critical condition to riding high in the eyes of clinical investigators and investors over the past eight months.
Clovis had a huge June during which it reported positive results for drugs that treat non-small cell lung cancer and ovarian cancer, saw its share price skyrocket, and raised $275 million in a secondary public offering. The company’s share price has settled in the low $70s after peaking at $86.29 in the days after its results were reported.
That’s a far cry from where the company was at the end of last year. In November, Clovis announced Phase 3 trials yielded negative results for its pancreatic cancer drug. That sent the stock’s price down to a low of $11.19.
Despite the surge, Clovis says there’s a lot of work to be done to prove the two therapies are effective. They remain in Phase 1 and 2 trials, and the company expects to report new findings in the fall.