Eric Lefkofsky is aware of the general public itemizing rodeo properly and is about to enter it for a fourth time. The serial entrepreneur, whose web price is estimated at practically $4 billion, has already taken three companies he’s based public.
At present he’s the founding father of Tempus, a genomic testing and knowledge evaluation firm getting ready to IPO. However he’s finest generally known as the co-founder of every day offers pioneer Groupon, which went public at a valuation of practically $13 billion in 2011, in one among that 12 months’s most high-profile debuts.
Groupon’s IPO and post-IPO years had been infamously troubled, although the general public listings of his different two firms — InnerWorkings in 2006 and Echo International Logistics in 2009 — didn’t increase vital flags for buyers and did properly for Lefkofsky. InnerWorkings, a provide chain startup he based in 2001, offered to non-public fairness in 2021 for a fraction of its IPO market cap.
In the meantime, the inventory of Echo International Logistics appreciated steadily throughout its 11-year public life historical past earlier than additionally being offered to non-public fairness at a 50% premium over its final buying and selling value in 2021.
A few of the controversies with Groupon concerned a report that Lefkofsky pocketed over $300 million from Groupon’s pre-IPO spherical, leaving little working capital for the corporate, and slicing its reported income in about half in revised S-1 filings after regulators scrutinized the financials in its preliminary S-1. That unorthodox determination has additionally dropped at mild one other deal from his previous. He offered his dot-com-era firm Starbelly.com in 2000 to a 50-year-old firm; a 12 months later, that firm filed for chapter, in response to some reviews.
All of this has given Lefkofsky the repute of getting considerably of a golden contact, no less than for himself, however perhaps not for long-term buyers of his firms.
With Tempus, Lefkofsky is taking one other shot at making a long-lasting, worthwhile firm. It was reportedly his spouse’s profitable breast most cancers remedy that led him to discovered Tempus in 2015.
“I used to be perplexed at how little knowledge was part of her care,” he instructed Forbes final 12 months. “I turned fixated with this concept that there was all this know-how that had been created for different industries that may very well be utilized to most cancers care and assist physicians make data-driven selections.”
He stepped down from Groupon’s CEO function in 2015, when the corporate’s worth had fallen to $2.6 billion. (Groupon’s market cap at present is round $600 million.) At the moment, Lefkofsky targeted his consideration on an early-stage enterprise agency, Lightbank.
Apparently, the Tempus S-1 submitting says that he’s taken no wage for the previous two years (the S-1 didn’t present greater than two years’ price of govt compensation for any named officer). Nonetheless, the submitting additionally mentioned that he’s as a consequence of be paid $800,000 and an $800,000 bonus beginning in 2025. And, though he wasn’t drawing a wage, he was paid a $5.3 million dividend from firm inventory this 12 months, the prospectus reveals. The submitting additionally confirmed that Tempus has additionally coated the price of $7.5 million price of most well-liked shares issued to him and has paid $200,000 for his non-public airplane bills.
Tempus’ revenues had been $531 million in 2023, a 66% progress from $321 million in 2022. However the firm continues to be hemorrhaging loads of money, with web losses of $290 million (in 2023) and $214 million (in 2022). Though, the silver lining in its financials is that working loss margin has shrunk from 83% in 2022 to 37% in 2023, in response to the S-1 submitting.
Moreover, Tempus has an settlement with Pathos AI, one other firm Lefkofsky based. Pathos AI is a drug discovery platform based in 2020. Pathos pays Tempus for a proper to license its knowledge. In the meantime, Tempus’ COO, Ryan Fukushima, serves as Pathos’ CEO and splits his time between the 2 firms.
There are different indications that Lefkofsky is exercising extra energy at Tempus than is customary.
Whereas Tempus has not but crammed out its principal stockholder’s chart, revealing solely that Lefkofsky is amongst them and owns no less than 5% of the corporate, the billionaire clearly desires to protect full management of the corporate after it goes public. Tempus has granted his shares a whopping 30 votes per share. Tremendous voting shares are usually not uncommon, however 10 votes per share is extra frequent, with 20 votes thought-about excessive. So that is an unusually excessive shareholder affect for a CEO of a healthcare firm, and we’ll should see whether it is decreased in future S-1s, indicating whether or not potential buyers have balked at it.
But, Tempus’s S-1 is probably not exaggerating how important Lefkofsky is to the way forward for the corporate. A healthcare VC investing in firms in genomics and knowledge evaluation has instructed cryptonoiz that Tempus wouldn’t have grown to its dimension, nor garnered a lot capital with out Lefkofsky’s advertising and fundraising abilities.
Tempus raised $1.42 billion in funding from buyers, together with his agency Lightbank, in addition to from NEA, Revolution Progress, T. Rowe Value, 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 not too long ago obtained $200 million from SoftBank.
No matter how a lot capital Tempus raises in its IPO, the corporate’s prospectus made it clear that it’s nonetheless removed from breakeven and can want “to boost extra capital sooner or later.” Whereas most unprofitable firms usually embrace this element of their prospectuses, it’s possible that buyers will count on Tempus to have a follow-on public providing sooner or later, which may very well be a drag on their share value.
Tempus can be attempting to place itself as an AI firm though AI income accounted for less than $5.5 million of income, roughly 1% of complete income in 2023.
“I see Tempus playing on their progress and ripe timing for AI throughout life sciences, however I don’t assume the corporate has confirmed that but with their present providing,” the healthcare investor mentioned.
The corporate mentioned in its S-1 submitting that whereas its “AI product line is nascent, it plans to embed AI, together with generative AI, in each facet of its diagnostic instruments.” Tempus declined to remark past what’s listed within the S-1.