This article first appeared in Boston Business Journal, a sister publication of BostInno.
Shares of Waltham-based Carbon Black Inc. popped about 30 percent in their first few hours of trading on the Nasdaq Global Select Market on Friday, settling around $24 as of mid-afternoon, in the first initial public offering of a Massachusetts tech company so far in 2018.
Carbon Black (Nasdaq: CBLK) initially offered underwriters 8 million shares at $19 each, raising $152 million. It's a milestone in the long journey of Carbon Black, which was founded under the name Bit9 in 2002.
The IPO also represents a victory for a number of Boston-area venture capitalists and for the local cybersecurity industry, which has seen a flood of startup investment in recent years but relatively few major exits.
“It’s a monumental moment,” said Tom Barsi, Carbon Black's senior vice president of corporate and business development, in a call from Nasdaq's headquarters minutes after company executives rang the exchange's opening bell.
But both Barsi and Paul Morville, vice president of product management, echoed Carbon Black's philosophy that the IPO is just one step along the path toward building a dominant company in the so-called endpoint security market.
“It’s a $19 billion market we’re going after and it’s up for grabs," Morville said. Endpoint security software — which helps companies detect threats to their cloud-based IT infrastructure by analyzing data from employees' phones and computers — is a rapidly growing sector with imposing West Coast competitors like CrowdStrike and Cylance.
With 534 employees in Massachusetts, Carbon Black is the second-largest cybersecurity employer in the state, according to Boston Business Journal research. The company has raised at least $191 million in total funding.
For Jeff Fagnan, a founding partner at venture capital firm Accomplice and the first institutional investor in Bit9 back in 2005, the IPO was a cause for celebration, but only for a moment.
“It doesn’t change anything that we’re doing. We have a Carbon Black board meeting next week,” Fagnan said. "For Accomplice it just validates our patient-capital, company-building approach.”
Accomplice owns 17 percent of Carbon Black, according to the company's S-1 filing with the U.S. Securities and Exchange Commission. Other local investors include Highland Capital Partners, which owns 14.9 percent; and .406 Ventures, which owns 7.7 percent.
Carbon Black reported $162 million in revenue in 2017, up more than 39 percent over 2016. The company also reported a net loss of $55.8 million in 2017.
Carbon Black is the eighth Massachusetts company to debut on the Nasdaq so far this year, according to the exchange. Seven of the previous eight were companies in the biotechnology sector.
