Cybersecurity Startup Prepares for a London IPO
Darktrace Seeks Valuation of $4 Billion
Darktrace, a UK cybersecurity startup, is planning to go public on the London Stock Exchange.
The company is planning to raise $350 million to $400 million in its IPO, which would value it at around $4 billion.
Demand for Darktrace’s software, which relies on artificial intelligence to spot cyber attacks, has been surging in recent years. The company’s revenue grew at a compound annual run rate of 58% between 2018 and 2020. Darktrace’s revenue was $126.5 million for the second half of 2020—up from $91.1 million a year earlier. The cybersecurity company’s customers include Coca-Cola (KO), Rolls-Royce, and the city of Las Vegas.
Darktrace’s Association With Michael Lynch May Cause Difficulties in IPO Process
Darktrace’s IPO success may hinge on convincing investors it doesn’t face any legal or regulatory risks related to Michael Lynch. The British tech entrepreneur was an early investor in Darktrace and is now embroiled in a legal dispute with Hewlett Packard Enterprise (HPE) over the sale of Autonomy, the software company he owned. Mr. Lynch is fighting to avoid extradition to the US to face fraud charges. Darktrace is working to assure investors that Lynch’s association with the company will not expose it to legal difficulties.
Darktrace’s Chief Executive Poppy Gustafsson said Lynch isn’t involved in the daily operations of Darktrace and that she speaks with him on an “ad hoc basis” as she does other investors. She denied a report that Lynch’s stake has been altered to minimize his influence on the company.
Darktrace’s Plans After the IPO
Darktrace is expected to use the proceeds from its IPO to expand its research and development facilities in Cambridge. The company will also use the cash to hire more software engineers in order to meet growing demand. “There’s 150,000 companies that could benefit from our technology,” Darktrace’s CEO said.
Darktrace’s IPO will test investor appetite for UK tech stocks. The London Stock Exchange wants to lure tech companies its way, but this has been challenging so far. Deliveroo, the UK delivery startup, listed its stock at the low end of its IPO range and its shares are down nearly 37% since it began trading in March. The London Stock Exchange’s leadership is hopeful that Darktrace will have a successful IPO which will encourage other UK tech companies to list close to home.
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