Etsy IPO 2015: 5 Things We Learned From The NYC Startup's IPO Filing
Etsy Inc. filed for an IPO Thursday that will value the company at $100 million, according to the company's S-1 filing with the Securities and Exchange Commission. Some analysts expect that the value of the online marketplace for handmade and vintage crafts could reach as high as $2 billion in the lead-up to the initial public offering, which would put the company on track for the largest stock market debut for a New York City technology company in 16 years. Etsy will list its shares on Nasdaq under the ticker symbol ETSY. Here are five key points in the documents the company filed with the SEC:
What Is Etsy?
The e-commerce startup was founded in June 2005 in Brooklyn, New York, as a marketplace for handmade goods and craft supplies. Since then, Etsy has built a platform on which 54 million members connect to make, sell and buy unique goods, including vintage and artisanal products. There were roughly 20 million active buyers on the Etsy marketplace and 1.4 million active sellers, as of Dec. 31.
How Etsy Makes Money
The company’s business model is simple: Etsy profits when Etsy sellers make money. In 2014, Etsy sellers generated sales of $1.93 billion, up 43.3 percent from 2013. Just over 36 percent of sales last year were derived from purchases on mobile devices and 30 percent of sales came from a seller or buyer outside the U.S. Revenue from the marketplace includes fees Etsy sellers pay for listing items and completed transactions.
What Etsy Plans To Do With IPO Proceeds
Etsy hopes to use money generated from its IPO to grow the business. The company plans to hire more employees in multiple locations globally to increase Etsy’s visibility and to help elevate the company’s sellers and attract more buyers. The company also says it will use $300,000 of the proceeds to partially fund Etsy.org, a nonprofit organization the company formed in January 2015 dedicated to educating and helping women and other underrepresented entrepreneurial populations build businesses. Etsy did not specify the number of shares it will make available or the price range for the offering in its prospectus.
The Etsy Economy
Etsy is aiming to create a new economy it dubs the Etsy Economy, where entrepreneurs can find work in global and local markets for their creative goods. Etsy’s platform also seeks to help consumers discover and buy unique goods and build relationships with the people who sell them.
Etsy sellers have self-organized into more than 10,000 groups around the world, known as Etsy Teams, the company said in its S-1 filing. The teams provide local support to each other and collaborate with Etsy on initiatives such as teaching entrepreneurship to economically disadvantaged people in their communities.
The company launched the Etsy Craft Entrepreneurship Program with Rockford, Illinois, Mayor Larry Morrissey in 2012 to help the city after it faced multiple challenges, including high unemployment and a struggling economy. The program aimed to teach people with a craft skill in the community that entrepreneurship and economic opportunity were within reach on the company’s platform. The company has since extended this program to 10 cities around the world.
Risk Factors
Etsy has a history of operating losses and may not achieve or maintain profitability in the future, the company warned in its filing. Etsy had a net loss of $15.2 million in 2014 compared with a net loss of $800,000 in 2013. Last year, Etsy posted revenue of $195.6 million, up more than 56 percent from a year earlier.
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