Cybersecurity company Carbon Black closes up 26% on its first day of trading after raising $152M in its IPO and is now valued at $2B
Dan Primack / Axios : Tweets: @danprimack Tweets: Dan Primack / @danprimack : Carbon Black is now worth $2 billion. At one point it was based in a lousy mall and its young employees included @drewhouston http://www.axios.com/...
Context & Ripple Effects
A month after its IPO filing revealed $162M in 2017 revenue against a $56M net loss, Carbon Black has converted that disclosure into a $2B public-market valuation, closing up 26% on day one and raising $152M. The debut extends a pattern from late 2016, when security software maker Blackline closed up nearly 40% on its first trading day after raising $146M — public investors have been consistently rewarding first-day pops in this category.
First-order effects
- Carbon Black's early private backers and employees now hold liquid shares priced well above the IPO level, and the company banks $152M to fund growth while still unprofitable.
Second-order effects
- The premium valuation gives Carbon Black currency and confidence to compete for enterprise security budgets against larger incumbents, pressuring rivals to either match its growth-at-a-loss model or consolidate.
Third-order effects
- Consolidation pressure materialized quickly: within about a year, VMware agreed to acquire Carbon Black for $2.1B, folding an independent public security vendor into a platform giant — the same trajectory later seen when Acronis kept raising at rising valuations rather than going public.
The trend: Enterprise cybersecurity is cycling through rapid IPO debuts and quick absorption by platform acquirers, with public markets pricing security vendors as consolidation targets almost from day one.