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Twilio, Several Other IPOs on Tap This Week

Twilio opened Thursday, June 23, at $15 a share. During intraday trading it surged 92% above that price and closed at $28.79. It’s market cap is valued at $2 billion.

As you know, there have been few opportunities for investors to get in on initial public offerings this year. However, that will change next week as four companies, with various sized offerings will be in the market.

The market has been especially dry for Silicon Valley tech companies going public, but Twilio will change that. The cloud communications company is expected to well, which could spur other tech companies to go public.

Twilio is looking to raise up to $130 million, with 10 million shares priced between $12 and $14. Twilio is one of the bright stars, startup companies in the tech sector right now. It’s been reported that Twilio’s offering will be the first initial public offering from the tech sector in six months. The last IPO from Silicon Valley was Square, the payment systems company.

One of the reasons tech companies have been slow to go public has to do with so-called unicorn valuations, which refer to startup corporations with valuations of at least $1 billion. Twilio’s valuation is $1 billion.

Twilio is fast-growing due to the type technology it offers. It is aimed at software developers and some of the companies that use it are Facebook and Uber. They use Twilio’s technology to add voice or text communications features to their apps.

While Twilio’s market cap is estimated to be $1 billion, its profits are virtually non-existent. Its annual revenues rose to $167 in last year. That’s impressive considering it was just $50 million in 2013.

Through six rounds of funding, from 23 investors, it achieved $233 million of funding. Twilio will trade on the NASDAQ under the ticker TWLO.

Angel investors have gone to town with tech companies, which has caused their valuations to reach these billion-dollar levels. This has made them unattractive to investors who trade stocks in the public market.

Many startups have many reluctant to go public because they may have to discount their valuations, which many are unwilling to do.

Roger Lee, a general partner with Battery Ventures, said he doesn’t expect a surge of tech IPOs to immediately follow Twilio. But to break an IPO market out of a slump, one or two brave companies must go first and test the waters, he said.

“There are at least 20 or more really good companies that could go public in the coming few quarters here, and if there is a successful IPO from Twilio, I wouldn’t be surprised to see them push forward with their own IPOs,” Lee said. “That’s why everyone’s watching.”

Selecta Biosciences plans to raise up to $75 million in its IPO. The biotech company uses synthetic vaccine nanoparticles to develop treatments for rare and serious diseases. Selecta reported $6 million in revenue for a loss of $3.88 a share for 2015. It plans to trade on the NASDAQ under the ticker SELB.

Gemphire Therapeutics will seek to raise $45 million through the offering of 3.8 million shares. It plans to raise $45 million at a price between $11 and $13 a share. About 22% of the shares, or $10 million worth, will be purchased by insiders. The company develops therapies for the cardiovascular disease dyslipidemia.

Tactile Systems Technology, which sells at-home compression therapy devices for vascular swelling, plans to raise $60 million by offering four million shares. The price range will be between $14 and $16.

The Minneapolis-based company plans to raise $60 million by offering 4.0 million shares at a price range of $14 to $16. At the midpoint of the proposed range, Tactile Systems Technology would command a fully diluted market value of $262 million.

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