The Homemade IPO
Etsy, the e-commerce website for buying and selling handmade and vintage goods has just applied for a $100 million IPO.
Founded in June of 2005, the site will celebrate its 10th birthday this year. Ten years has become a golden age for companies in the technology sector and common year in a business’s lifetime to go public.
The unofficial practice within the tech industry to go public after being in business for 10 years or more has most notably been done by Alibaba Group Holding Ltd. (NYSE: BABA) and GoPro, Inc. (NASDAQ: GPRO).
Serving as a platform for vendors to sell products which they have often created themselves, Etsy charges its users 20 cents to list a product and takes a 3.5% commission for each item sold on the site.
With 1.4 million active vendors and more than 20 million buyers, the site had an annual revenue of $126 million in 2013 and the following year saw a total of $196 million, an increase of 56%. The site’s minimal overhead allows for a larger share of that number to be profit rather than go towards expenses.
Etsy attributes its explosive growth to the trend of e-commerce becoming the most popular way for people to purchase goods.
The company has gone through eight rounds of funding which have raised a total of $97 million, and involved tech investors like Accel Partners and Union Square Ventures.
With Etsy having been up and running for some time and only gaining in popularity, it’s practically running itself at this point.
Keep an eye out for this IPO within the next year or so. It might not have the depth of some of the upcoming IPOs that I’ve discussed in the past but that doesn’t mean that it can’t make a positive contribution to your portfolio.
