Every startup entrepreneur in Silicon Valley wants to talk about IPOs. Of course, all the IPO talk has been fueled by the huge success of the Twitter (TWTR) offering.
But what is the long-term impact of all these IPOs? I recently had a chance to interview a venture capitalist at Eniac Ventures, Hadley Harris.
Harris has a great background in the mobile world, serving as an executive at companies like Thumb and Vlingo, which was acquired by Nuance (NUAN) for $225 million a couple of years ago.
So here’s what Harris had to say about IPOs:
Q: Do you think the Twitter IPO is good for startups?
A: Twitter’s successful IPO is good for startups, especially ones that focus on mobile consumers. Facebook’s (FB) IPO debacle sucked the wind out of the sails of many young startups. It affected the perception of how big they could get, which obviously affects their valuations. For this reason, many startups that had enjoyed strong support from the VC community prior to FB’s IPO struggled to raise new financing rounds, or raised money at lower valuations. It also raised a large question about the value of mobile users since FB was struggling to monetize them. With Twitter’s results so far, the idea that a mobile consumer tech company can become a $20B company has been solidified.
Q: Should we get ready for more tech IPOs?
A: Twitter’s strong public offering will likely lead to more. After FB’s struggles, there were reports that companies like Airbnb and Evernote pulled back after having plans to [go public]. My opinion is that some larger private tech companies who were on the bubble prior to Twitter’s IPO will now feel more comfortable moving forward with their own public offerings.
Q: What’s Twitter impact on the mobile front?
A: People forget that Twitter, unlike other large social networks, was a mobile-first company. In its infancy, the only way to send a Tweet was via a text message. More importantly, when it [went public], 70% of its revenue came via mobile. Its mobile DNA allowed Twitter to nail the kind of native mobile advertising that Facebook struggled with at first. Twitter than further solidified its mobile monetization prowess by buying the leading mobile ad exchange in Mopub. Overall, I’m pretty sure the Twitter IPO will have a positive effect on the valuations of other mobile companies.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.