Is it IPO season?
It might be. The Portland metro area and Oregon have at least three companies actively working on public market debuts. Added to that are two companies that have stated intents to go public this year and another that likely has a ticking clock. That results in six strong IPO contenders for a region that hasn’t seen much activity, let alone several in one year.
The latest company to file for public markets is Vancouver-based Absci, a fast-growing biotech company that engineers living organisms to make therapeutics. Its protein-printing technology helps speed biopharmaceutical research and development.
In May, Wilsonville grid-scale battery maker ESS Inc. announced a deal to go public via a merger with a special purpose acquisition company, or SPAC. ESS is merging with ACON S2 Acquisition Corp. (Nasdaq: STWO) in a deal that values the company at $1.1 billion.
Then, in June fast-growing coffee chain Dutch Bros announced it has confidentially filed, with the Securities and Exchange Commission, the paperwork needed for an IPO. The company’s detailed filings have not been made public yet.
Software maker Puppet said it is targeting 2021 for a possible IPO and has built out its board to reflect that. It has not yet filed anything publicly about these plans. Beaverton software maker Exterro, which is backed by private equity, has also stated an intent to go public possibly as early as this year.
Another potential debut is Vacasa, which has stated in the past its intent to go public and has lately experienced growth as vacation home rentals surged coming out of the Covid-19 pandemic. Vacasa has raised $634.5 million from investors.
“The diversity of industries in the IPO pipeline is the most exciting aspect of this storyline,” said Diane Fraiman, managing director of Voyager Capital and a longtime tech executive. “A strong balance of consumer, energy, software and biotech is a healthy long-term ecosystem for the region’s future in regard to jobs, regional competitiveness and economic health.”
For Oregon, new public companies signals growing, sustainable organizations that will retain their local bases. For years, Oregon-based public companies have been scooped up by out-of-state firms, resulting in a loss of several local headquarters. While jobs may stay, a headquarters is considered important for training more local executive talent and for retaining the high-paying top jobs.
“There will be more successful local executives who are more inclined to support local arts, culture and schools, which makes Oregon more attractive for investors,” said Eric Rosenfeld, founder of Oregon Venture Fund, which is an investor in Absci. “It’s a positive feedback loop, like what we see in Seattle and Austin.”
It’s this virtuous cycle that Juan Barraza, an entrepreneur, connector within the Portland startup ecosystem and scout for VamosVentures, said he hopes will accelerate if these public debuts come to fruition.
“What it will solve in the short term is that many of these soon-to-be millionaires or employees that are vested and able to enjoy the benefits of a successful IPO, they will launch more companies locally and have the means to fund them,” he said. “At the base minimum we want to see all the additional capital stay in Oregon and get to fund more companies.”
For John von Schlegell, longtime investor and co-founder of private equity firm Endeavour Capital, the spate of local IPOs is an exciting opportunity. Though, he hopes it does not portend a bubble.
“Short answer, I think it’s great,” he said. “We (Endeavour) are very nationalistic about Oregon and the Northwest, we like to fund and keep companies here and not be consolidated away somewhere.”
Since 2017 there have been four IPOs for Oregon and Southwest Washington. The two largest, by far, were Vancouver-based ZoomInfo, which raised $1.02 billion in 2020; and Camas-based laser maker nLight, which raised $96 million in 2018.
Electric vehicle maker Arcimoto, based in Eugene, raised $20 million in 2017. In 2020, Sisters-based food manufacturer Laird Superfood raised $52 million.
The rumor mill of potential local IPO candidates has been fired up since about 2015, when high-profile software companies insisted on staying here despite raising large amounts of VC.The timing of all this activity now could be tied to not only the maturity of the companies and the size of their target markets but also the regulatory environment and the public markets' performance, said Rosenfeld.
“Companies used to go public more frequently,” he said. But regulations like Sarbanes-Oxley and others made public debuts more costly for smaller companies. Add to that rule changes for private equity and venture capital, and those two options became more attractive in the 1990s.
“That kept companies private longer. Growing all the value offline from public markets. That was the norm for two decades,” Rosenfeld said. “Finally, public markets are at all-time highs and we have been able to grow in Oregon a crop of companies that are targeting large markets, are well run and can support being public.”
