Page 58 - Pay Magazine s2014

finance & strategy
The ABCs of the Industry’s IPOs
publicize innovation initiatives to their investors. If companies have good track records and can explain that, for example, investing two years on a project will move their companies forward, then share- holders will be patient.
Asking investors to be patient, however, can be a tough sell. “Private companies must meet the needs of a much narrower set of investors, which means they often have more exibility,” says Oglesby. “There’s a lot more scrutiny on public com- panies and for public companies to ... meet the investment re- quirements of a broad set
of investors.”
Small, private companies can innovate in-house, while larger, public companies frequently invest in, and watch innovation happen, and then acquire the private companies whose innova- tions prove successful, Oglesby explains. “It’s the di erence be- tween creating innovation and enabling innovation.”
Luria says there are tradeo s that have to be made whether a com- pany is privately or publicly held. “It’s easier to innovate when a company is small because there’s less bureaucracy, less resistance, less organizational activity pre- venting innovation from happening, and then venture capital is often
a better funding source when
a company is trying to innovate,” Luria adds. “The ipside of that is the larger, publicly traded
Private companies must meet the needs of a much narrower set of investors, which means that they often have more exibility. There’s a lot more scrutiny on public companies and for public companies to ... meet the investment requirements
of a broad set of investors.
—Rick Oglesby, Double Diamond Group
companies have very substantial resources at their disposal to either drive innovation internally or buy that innovation elsewhere. So, a lot of innovation does still come from the larger companies because they’re in a position to acquire that innovation and deploy it at scale.”
Given the headline-making—and some record-setting—IPOs last year, many in the industry might be wondering what’s in store for this year.
While there aren’t any obvious companies like First Data, Worldpay or Vantiv in the chute, there are a host of venture-capital and private-equity backed pay- ments companies promoting their companies, says Intrepid Ventures’ Grover. “At least some of those companies are likely to try an
IPO over the next several years.
If Alipay were to do an IPO or Vodafone were to spin o M-Pesa, it would be epic.”
Luria adds another possible company into the mix. “The most important IPO to look forward to over the next couple of years is from Stripe, which has taken online payments by storm, especially in supporting the new wave of innovative commerce companies and big social networks,” he says.
Like Grover, Luria expects more payments companies to go public in coming years “as they weigh the bene ts of public listings more than the drawbacks.”
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