According to Crunchbase statistics, all birds is a tech-enabled shoe firm that has raised a number of venture capital rounds since mid-2015. It is also becoming public. Regardless of how it fits into — or did not fit into — a particular trend we are tracking in the bigger startup market, the company’s IPO would be something we would cover. However, fortunately for us, Allbirds’ IPO price not only reaffirms its own value but also adds some context to the valuation of comparable enterprises.
This is because it is a “tech-enabled corporation,” rather than a pure technology firm. To reiterate our distinction, we consider Allbirds tech-enabled rather than tech proper because it uses technology methods (in this case, e-commerce) to improve on a traditional business (making and selling shoes), rather than, say, operating a purely digital marketplace where others sell wearable goods. If you want to get technical, you can use a gross-margin test to make this distinction.
“Tech-enabled” may appear to be a derogatory term, but it is not. It is a description, and it is only nasty if you are expecting pure-tech values and, implicitly, higher revenue multiples than are genuinely deserved for tech-enabled enterprises. This week, Allbirds provided price information for its IPO, giving us another look into the world of tech-enabled values. Given that, Rent the Runway recently priced its IPO nicely and Sweetgreen is waiting in the wings, this is an important subject.
With a large number of pure tech firms coming public at the same time as a large number of tech-enabled unicorns, we may divide the two groups into discrete cohorts. With that out of the way, let us speak about Allbirds and what its predicted revenue multiple tells us about how firms like this are valued. Hint: It appears, as we are getting closer to deciding on a pricing range.
Allbirds announced in an S-1/A filing this week that it anticipates its IPO to cost between $12 and $14 per share. The corporation is selling 15,384,615 shares and has the option to sell an additional 360,415 shares if certain criteria are met. This translates to a total of $220.4 million in gross proceeds for the firm, excluding shares sold by current owners. Allbirds plans to have 143,480,229 shares outstanding following its first public offering, including the full amount of shares offered to underwriters, which they may or may not acquire. With that maximum number of shares and the top end of Allbirds’ current IPO pricing range, the firm would be valued at $2.0 billion.