Eric Lefkofsky is aware of the rodeo nicely on the general public listing and is about to take part in it for the fourth time. The serial entrepreneur, whose fortune is estimated at almost $4 billion, has already taken three of the companies he based public.
Right this moment, he’s the founding father of Tempus, a genomic testing and knowledge analytics firm that’s making ready for an IPO. However he is finest recognized for co-founding day by day offers pioneer Groupon, which went public at a valuation of almost $13 billion in 2011 in one of the high-profile debuts of that 12 months.
Groupon’s IPO and post-IPO years have been notorious, although the general public listings of two of his different corporations — InnerWorkings in 2006 and Echo International Logistics in 2009 — did not trigger a lot bother for traders and labored out nicely for Lefkofsky. InnerWorkings, a provide chain startup he based in 2001, was offered to non-public fairness in 2021 for a fraction of its IPO market cap.
In the meantime, Echo International Logistics’ inventory has steadily appreciated over its 11-year public historical past earlier than being offered to non-public fairness at a 50% premium to its final buying and selling value in 2021.
A number of the Groupon controversies included a report that Lefkofsky took greater than $300 million from Groupon’s pre-IPO spherical, leaving little working capital for the corporate and roughly halving its earnings in revised S-1 filings after regulators scrutinized the funds he has the unique S-1. This unconventional resolution additionally revealed one other deal from his previous. In 2000, he offered his dot-com-era firm Starbelly.com to the 50-year-old firm; based on some experiences, this firm declared chapter a 12 months later.
All this earned Lefkofsky a popularity as a form of gold rush, at the very least for himself, however maybe not for the long-term traders of his corporations.
With Tempus, Lefkofsky makes one other try to create a long-term and priceless firm. His spouse’s profitable breast most cancers remedy reportedly led him to discovered Tempus in 2015.
“I used to be baffled by how little knowledge was a part of her care,” he advised Forbes final 12 months. “I used to be fixated on this concept that there was all this expertise that was constructed for different industries that could possibly be utilized to most cancers remedy and assist medical doctors make data-driven choices.”
He stepped down as CEO of Groupon in 2015, when the corporate’s worth had fallen to $2.6 billion. (Right this moment, Groupon’s market cap is about $600 million.) On the time, Lefkofsky turned his consideration to early-stage enterprise capital agency Lightbank.
Apparently, the Tempus S-1 doc states that he has not acquired a wage for the previous two years (the S-1 has not offered greater than two years of govt compensation for any of the named officers). Nonetheless, the paperwork additionally stated he was due $800,000 beginning in 2025 and an $800,000 bonus. And whereas he did not obtain a wage, he was paid $5.3 million in dividends this 12 months from the corporate’s inventory, the prospectus reveals. The submitting additionally revealed that Tempus additionally lined the price of $7.5 million value of most popular inventory issued to him and paid $200,000 for his non-public jet.
Tempus’ income was $531 million in 2023, up 66% from $321 million in 2022. However the firm continues to be shedding some huge cash, with internet losses of $290 million (in 2023) and $214 million (in 2022). The nice lining in its financials, although, is that its working loss margin has narrowed from 83% in 2022 to 37% in 2023, based on the S-1 submitting.
As well as, Tempus has an settlement with Pathos AI, one other firm based by Lefkofsky. Pathos AI is a drug discovery platform based in 2020. Pathos pays Tempus for the suitable to license its knowledge. In the meantime, Tempus’ COO, Ryan Fukushima, is serving as CEO of Pathos and splitting his time between the 2 corporations.
There are different indicators that Lefkofsky wields extra energy at Tempus than common.
Whereas Tempus has but to fill out a desk of main shareholders, revealing solely that Lefkofsky is amongst them and owns at the very least 5% of the corporate, the billionaire clearly needs to retain full management of the corporate as soon as it goes public. Tempus gave its shares a whopping 30 votes per share. Supervoting shares should not uncommon, however 10 votes per share is extra widespread and 20 votes is taken into account excessive. In order that’s unusually excessive shareholder leverage for a CEO of a medical firm, and we’ll need to see if it is diminished in future S-1s, indicating whether or not potential traders have balked at it.
Nonetheless, S-1 Tempus is probably not overstating how essential Lefkofsky is to the corporate’s future. The healthcare enterprise capital agency, which invests in genomics and knowledge analytics corporations, advised TechCrunch that Tempus wouldn’t have grown to its measurement or raised as a lot capital with out Lefkofsky’s advertising and fundraising abilities.
Tempus has raised $1.42 billion from traders together with his agency Lightbank, in addition to NEA, Revolution Progress, T. Rowe Worth, Novo Holdings, Franklin Templeton and Baillie Gifford. The corporate was final valued at $8.1 billion in October 2022. Tempus’ S-1 submitting additionally revealed that it lately acquired $200 million from SoftBank.
No matter how a lot capital Tempus raises throughout the IPO, the corporate’s prospectus made clear that it’s nonetheless removed from breaking even and might want to “elevate further capital sooner or later.” Whereas most loss-making corporations have a tendency to incorporate this element of their prospectuses, it’s probably that traders will anticipate Tempus to go public sooner or later, which may have an effect on their share value.
Tempus can also be attempting to place itself as an AI firm, though AI income was solely $5.5 million, roughly 1% of complete income in 2023.
“I see Tempus making of venture on their progress and the time is ripe for synthetic intelligence within the life sciences, however I do not assume the corporate has but confirmed that with its present providing,” stated the healthcare investor.
In its S-1 submitting, the corporate stated that whereas its “synthetic intelligence product line is nascent, it plans to embed synthetic intelligence, together with generative synthetic intelligence, into all points of its diagnostic instruments.” Tempus declined to remark past what’s listed within the S-1.
