Amplitude’s direct listing is at least the sixth this year as the IPO alternative gains traction in tech | My highlights in 20 minutes reading

Here is the article. 

Key points

• Amplitude, a maker of product analytics software, is the second direct listing for venture firm Benchmark, which has touted the approach.
• “I think we’ll see more deals within our portfolio and more generally,” said Eric Vishria, a partner at Benchmark and an Amplitude board member.
• Amplitude reported 66% revenue growth in the second quarter from a year earlier.

As vocal as Benchmark’s Bill Gurley has been about his preference for direct listings over IPOs, his venture firm has had limited success in getting its own portfolio companies to choose that route to the public market.

That may be starting to change. On Tuesday, analytics software vendor Amplitude debuted on the Nasdaq through a direct listing. Instead of raising fresh capital at a discount, the company allowed existing investors to sell shares at a market-clearing price.

Amplitude is only the second direct listing to come out of Benchmark’s portfolio. Asana, the collaboration software company led by Facebook co-founder Dustin Moskovitz, was the first, a year ago.

“I think we’ll see more deals within our portfolio and more generally,” said Eric Vishria, a partner at Benchmark and an Amplitude board member.

Amplitude shares opened at $50 and rose more than 9% from there to close at $54.80, giving the company a market cap on a fully diluted basis of about $7.1 billion. Benchmark, the largest investor, owns 15% of the company, with a stake worth over $835 million at the close.

The direct listing trend began with music-streaming app Spotify in 2018. Slack followed in 2019, and Palantir and Asana were the notable names of 2020. This year, there have been at least six direct listings, including by Coinbase and Roblox, while eyeglasses company Warby Parker is also set for a direct listing this week.

Gurley has boldly advocated on TV, Twitter and his own blog for the approach, arguing that the IPO process is permanently broken and that it amounts to a handover of cheap stock from companies to Wall Street. He reiterated that sentiment in an interview Tuesday on CNBC’s “Squawk Box.”

“As I’ve mentioned many times before, the legacy IPO process has devolved into this process where huge one-day gains are transferred from the investment banks to their trading clients,” Gurley said. “There’s a modern way to do it. You can actually use supply and demand to determine price and allocation, and that’s what the direct listing does.”