Compass CEO on IPO & Fundraising in Challenging Market

Compass Navigates a Turbulent IPO Market

Despite a recent trend of tech companies postponing their initial public offerings (IPOs) due to subdued investor interest, real estate technology firm Compass proceeded with its public debut today.

Following the pricing of its shares at $18 each – the lower boundary of a revised IPO range – Compass stock concluded the day with a gain of nearly 12%, closing at $20.15 per share.

CEO Discusses the Company's Market Entry

Robert Reffkin, CEO and founder of Compass, engaged with TechCrunch to discuss his company’s entry into the market amidst increasingly volatile conditions for tech and tech-enabled IPOs.

Reffkin addressed the question of whether Compass should be categorized as a technology company or a real estate brokerage. He drew a parallel to companies like Amazon and Tesla, emphasizing that these entities operate across multiple domains.

Amazon, for instance, functions as a logistics provider, an e-commerce platform, a cloud computing service, and a media outlet simultaneously.

IPO Results and Objectives

This argument proved effective, enabling Compass to sell 25 million shares – a reduced quantity – at its IPO price, generating gross proceeds of $450 million. This outcome, according to the CEO, aligned with the company’s primary goal for the public offering.

Departing from the conventional CEO statement about an IPO being a step in a longer journey, Reffkin clarified that securing a substantial influx of capital was the core objective, rather than achieving a specific price or valuation.

Considering recent postponements of IPOs by Kaltura and Intermedia Cloud Communications, this focus on funding could be considered bold. Nevertheless, Compass successfully achieved its financing goal with its debut, even experiencing a positive increase in value during its initial trading day.

Acknowledging a Challenging Market

Reffkin confirmed to TechCrunch the recent deterioration in the IPO market, a trend previously reported. He characterized the current environment as “challenging.”

The question arises: why pursue a public offering now, when private companies have access to considerable capital?

Reffkin highlighted the importance of possessing both a capable team and strong performance metrics. Further details regarding the latter will be available when Compass releases its first earnings report as a public company.

Currently, Compass has successfully navigated more difficult market conditions than anticipated, particularly given the strong start to the year for IPOs.

Below is a photo of the company’s founder and CEO with his mother, a figure he would include in any future public offering: