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Software, Web firms may dominate 2014’s IPOs

Wayfair.com’s cofounders, Niraj Shah (left) and Steve Conine
Wayfair.com’s cofounders, Niraj Shah (left) and Steve ConineMichael Partenio

For the state's tech workers who wear lab coats, 2013 was a big year. Ten Massachusetts biotech companies debuted on Wall Street. Now, it's the tech workers in T-shirts' turn.

At least a dozen Boston-area software and Web companies are poised to go public in 2014, taking advantage of a surging stock market where shares of major technology companies are climbing to new heights.

These won't be wet-behind-the-ears startups, either. Last year's IPO market featured many very young biotech companies, but the class of 2014 will probably include many seasoned tech companies, with established customer bases and profits, to boot.

Those getting ready for the public stage include some of the area's fastest-growing and best-known Web companies, such as Wayfair LLC, a Boston-based seller of home goods, Care.com Inc., a Waltham company that has built a marketplace for dog walkers and home health care nurses, and Karmaloop Inc., an e-commerce company that sells urban streetware.

Lesser-known software companies also appear to be gearing up. There's the software company Acquia Inc., which earlier this year hired the former top financial officer of Buddy Media Inc., a New York startup that fetched $736 million from Salesforce.com Inc. in 2012. And the cybersecurity firm Veracode Inc. brought on seasoned executive Ed Goldfinger, who helped take Zipcar public in 2011.


As the tech economy heats up again, and analysts and bloggers increasingly talk about another bubble, many of these Massachusetts software and Web companies that have been around for a decade or longer are seeing a market that hungers for what they offer.

"There's a window that has opened up again," said Anand Sanwal, chief executive of CB Insights, a New York firm that tracks investment in startups. "Because the IPO market had been closed for quite awhile, there have been a decent amount of companies that have raised quite a lot of capital and have been waiting in the wings."


What's more, he said, investors seem eager for the types of technology companies that Massachusetts has a lot of: those that mostly serve business customers.

Many of these mid-size Massachusetts tech firms started prepping their offerings as the IPO market heated up in 2013. Last year was the biggest year for IPOs since the heady dot-com days of 2000. A total 222 companies went public last year, raisinga collective $55 billion, according to Renaissance Capital, a Greenwich, Conn., firm that tracks the IPO market.

The highest-profile outing was Twitter Inc.'s. The social-media company took off when it hit Wall Street, jumping 73 percent on the first day of trading. It hit a high of $74 in December — nearly triple its IPO price. Twitter closed the year at $63.65.

Many of the most hotly anticipated IPOs for 2014 involve tech companies far beyond Boston. The short list includes Dropbox, the data storage company; Redfin, the online real estate company; Good Technology, a mobile software company; and Square, the payments startup.

One of the biggest IPOs of the year could come from Alibaba Group, the giant Chinese e-commerce company.

"The market loves the technology transformation that the next generation of companies is providing. It is looking for companies to disrupt the established players," said Tom Erickson, chief executive of Acquia, a Burlington company that has commercialized open-source software for Web development.

Acquia has the kind of rapid growth that's attractive to investors. Its revenues grew from $45 million in 2012 to about $70 million in 2013, Erickson said. The company has raised about $70 million from venture capitalists.


Like most top executives at companies that are eyeing Wall Street, Erickson would not give details about an IPO. Still, he acknowledged it's a major topic of conversation at board meetings. And, he said, the company could use the additional capital to continue expanding overseas.

Similarly, Niraj Shah was elusive when talking about an IPO for Wayfair, the company he cofounded in 2002. "We're aware of that opportunity to go public," he said. "There's a big appetite for a public e-commerce company."

Wayfair has been growing rapidly. It expects to record about $1 billion in revenue this year, up from $600 million in 2012.

The trick for Wayfair will be to convince investors its business won't be taken over by Amazon.com Inc. That involves continuing tobuild up its name recognition with consumers, Shah said.

"As much as 2013 was a great year for us, you're going to hear about Wayfair far more in 2014," he said.

Of course, it remains to be seen which companies make the leap from private to public, but a few are already on the move.

Care.com has filed paperwork to start the process to begin trading on Wall Street, as have the biotech companies Eleven Biotherapeutics Inc. and Genocea Biosciences Inc., both of Cambridge.

While local IPOs in the coming year are apt to be dominated by software and Web companies,the biotech sector isexpected to have a good showing, too. A string of young Massachusetts biotechs hit the market last year, greeted enthusiastically by investors. But with the dot-com crash still in the minds of tech investors, bankers, and executives, the recent frothiness around technology stocks and IPOs is generating some caution.


Skyrocketing valuations for startups and the strong investor interest are reminiscent of another time for venture capitalist Michael Greeley, general partner at Foundation Medical Partners. "It felt like it was 1999, and we all know what happened after that," he said.

Michael B. Farrell
can be reached at michael.farrell@globe.com.