MariaDB uses SPAC to begin NYSE trading in a tough market for public offerings
Tech IPOs down 85 percent on last year, research finds
Analysis MariaDB has celebrated going public a few weeks before the end of a year which has seen a dramatic shift in the fortunes of tech companies raising money on the world's stock exchanges.
Earlier this week the database company, which has built cloud services on a fork of MySQL, announced the start of trading of its shares on the New York Stock Exchange. It reached the flotation via the special purpose acquisition company (SPAC) Angel Pond Holdings. With the move comes $104 million in funding and $18 million through private investment in public equity.
The investment comes on the back of a difficult year for those hoping to raise cash by going public. Global consultancy EY just released its quarterly IPO data report showing in 2022 the number of US tech IPOs dropped 85 percent – from 128 to 19 – while their total valuation dropped 97 percent – from $69.4 billion to $1.6 billion compared to 2021.
MariaDB CEO Michael Howard told The Register it was hard to see many database companies using stock exchanges as a funding model in the immediate future. "With the market conditions, it's going to be damn hard for startups that don't have a business model and market fit to suddenly go into the database market, which is high intensive capital requirements," he said.
He said he had not planned to launch an IPO this year, but the approach by Angel Pond represented "something very special" in terms of the people it brought and the opportunities it could create.
Angel Pond was started by CEO and chairman Ted Wang, the founder of Puissance Capital Management and a former partner at Goldman Sachs, and Simon Xie, co-founder of Alibaba Group.
It was the combination of experience with financial services and the Asian market which appealed to MariaDB, together with the guidance of the process.
"For IPO in and of itself, it gave us an efficient and knowledgeable means to go public. Without having these people surrounding you, you're kind of a babe in the woods," Howard said.
MariaDB ended its financial 2022 with more than $50 million in annual recurring revenue from 600 customers in over 60 countries.
But details on profitability would have to wait until it reported results to the market, Howard said.
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"When you do become a public company, you do tend to you have to come up with a plan to become very cost efficient. Over time, we will reach really good earnings-before-tax results," he said.
The market for data analytics and databases has seen some spectacular valuations and IPOs in recent years, not least of which was Snowflake, the cloud data warehouse and platform, which peaked at $120 billion in late 2020, making it worth more than IBM on paper.
But not everyone made the gold rush. Data lake and machine learning specialist Databricks was set to be "IPO-ready" in 2021, CEO Ali Ghodsi said at the time.
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In November, he told The Register there were no plans to go ahead. "The markets are shut down, largely. We're not super eager to jump out right now. But we will be a public company, at some point, and we are operating with the internal maturity and rigor of public companies."
Databricks did, however, take a $1 billion investment round in February 2021, with AWS, Microsoft, Google, Andreessen Horowitz (Netscape founder Marc Andreessen's VC firm), and Salesforce Ventures chipping in. For one, it is unlikely to be running short any time soon. ®