Zynga Ups the Ante on IPO to Raise as Much as $1.15 Billion
Zynga is officially on its way to IPO-Ville. — The company has filed with the Securities & Exchange Commission to raise between $850 million to $1.15 billion. At the high-end that would be roughly $15 million more than it had previously indicated it would raise.
Context & Ripple Effects
Zynga's road to an offering has been running all year: talks valued the company above $7 billion in February 2011, followed by a $500 million private raise at a $10 billion valuation that same month, before it filed to raise $1 billion in its July S-1. Two days ago Reuters reported it was aiming for roughly a $10 billion valuation when it prices on December 15.
Today's amended filing lifts the range to $850 million–$1.15 billion — up to $150 million more than the original target — and TechCrunch's pickup shows CEO Mark Pincus personally pitching investors on video. The size bump matters because Zynga is heading into its debut carrying confirmed governance wrinkles: Pincus's outsized voting power via multi-class stock, and reports last month that some employees were pressed to surrender pre-IPO shares.
First-order effects
- Zynga stands to bank up to $1.15 billion at pricing, giving it a war chest well beyond the $1 billion set out in its July registration statement.
- Pincus sells shares into the offering while retaining control through the multi-class structure he disclosed in October, so public buyers get exposure without proportional voting say.
Second-order effects
- If the rumored ~$10 billion valuation holds at the December 15 pricing, it ratifies the private-market mark set by the February $500 million round rather than forcing a discount — a signal other late-stage consumer internet startups will price against.
- Rivals in social gaming now face a publicly funded competitor able to accelerate Project Z and the new slate of Ville titles announced at Zynga Unleashed in October.
Third-order effects
- The deal extends 2011's pattern of consumer internet companies going public with founder-protecting dual-class structures, normalizing the trade-off public investors are being asked to accept.
- A successful listing converts social gaming from a venture-backed niche into a public-market sector, with Zynga's disclosed dependence on Facebook and virtual goods becoming the metrics analysts benchmark the whole category by.
The trend: Consumer internet companies are carrying their private valuations straight into public markets in 2011, trading founder control via dual-class stock for access to IPO-scale capital.