IoT security company ForeScout Technologies prices IPO at $22/share, raising ~$116M at ~$800M valuation, less than its $1B valuation as a private firm in 2016
Katie Roof / TechCrunch :
Context & Ripple Effects
ForeScout's road to this pricing started with its $76M round led by Wellington Management at a $1B valuation in January 2016, which put it in unicorn territory on the back of network-access control demand. When it filed to go public three weeks ago, the S-1 revealed why the public markets would push back: a $75M loss on $167M in revenue in 2016, wider than the prior year's $27M loss on $126M.
Pricing at $22/share values the company around $800M — a markdown against that 2016 private mark, and a data point on how much harder it became in 2017 to carry a growth-stage valuation into an IPO while still burning cash.
First-order effects
- ForeScout banks ~$116M of primary capital and gains public-company currency, but investors from the Wellington-led 2016 round are marked down roughly 20% versus their entry price on day one.
Second-order effects
- The down-pricing sets a cautionary benchmark for other late-stage cybersecurity and IoT startups weighing IPOs: public buyers will discount unprofitable growth, pressuring peers to widen margins or accept lower marks before listing.
Third-order effects
- The pattern here ends in consolidation rather than a durable public run — ForeScout later agreed to be taken private by Advent International at $1.9B (the February 2020 deal), suggesting the value gap between discounted public prices and strategic worth gets captured by buyout firms instead of public shareholders.
The trend: Cybersecurity unicorns are reaching public markets below their private valuations, with private equity ultimately arbitraging the gap through take-privates.