The potential sale of MariaDB to K1 Investment Management for $37 million is a capstone on the failed era of SPAC mergers that gained prominence for a brief time in venture circles during the last startup boom.
Remember SPACs? Special purpose acquisition companies, also known as blank-check companies, were used heavily in 2021 and 2022 to take a true number of venture-backed startups general public. The wide variety combinations produced lawsuits, bankruptcies, and a sum that is great of shareholder wealth.
And while some companies that took this shortcut to the public markets were speculative, others were more serious businesses — MariaDB was one company that is such
After raising nine figures over a decade, MariaDB stated it had shut a $104 million Series D round alongside a merger with Angel Pond Holdings, a SPAC. The merger was closed, much of the SPAC cash was nowhere to be found in its redeemed at $10 per share, MariaDB said its equity valuation after the merger would be $973.6 million, with an enterprise value of $672.1 million — the difference in valuations here was attributed to a large fundraising event that would come as part of the proposed SPAC deal.tanked sharplyHowever, by the time. Some 99% of the shares held in Angel Pond were
, removing $263 million from the deal’s value. The investors that chose to sell their shares in this way did better than anyone who stuck around, because MariaDB’s stock SPAC pitch during its first day as a company that is public. These days, MariaDB’s stock positions at $0.36 per share, which can be significantly a lot better than its 52-week minimum of $0.16 per share on February rally that is 2.first quarter of FY 2024Modest, MariaDB has not lived up to its investors’ expectations. The company forecast its annual recurring revenue (ARR) to reach $53 million in FY 2022, and $72 million in FY 2023 in its. It anticipated income of $47 million in FY 2022, and $64 million in FY 2023.company issuedBut the business ended up being an year that is entire its projected growth curve, reporting revenue of $53.1 million and ARR of $50.3 million in 2023. In the to satisfy the end of a term loan, MariaDB reported revenue of $13.6 million, up from $12.8 million a ago year. As well as that improvement that is modest top line, MariaDB also managed to more than halve its operating loss to $5.6 million, and narrowed its net loss to $8.9 million from $12.8 million a year earlier. More importantly, the ongoing business considerably decreased its money usage. Plus in the quarter that is same its operating cash deficit improved to $1.4 million from $14.1 million.
But these improvements seemed to come a little too late: the effect that is combined of increasing gradually and quickly draining coffers intended that MariaDB couldn’t go a lot longer without raising more cash. It’s a good idea, then, that the* that is( a “senior secured promissory note” to RP Ventures worth $26.5 million last October. That funding was used that is( aided by the European Investment Bank. However the ongoing company went into breach of its rescue loan and now finds its options are limited.
That situation makes K1’s offer all the more interesting, since the terms of the RP note were clear regarding the limitations it set on the company. Presumably, K1 expects RP to clear a purchase that is potential of finished up going general public while unprofitable, but without because fuel that is much it might have hoped for. This state of events is pretty much a worst-case scenario: you go public (more scrutiny) while losing money (cash reliant) against limited reserves (cash balance), coupled with a slowdown in the industry and a suddenly conservative valuation climate for any startup. You find yourself cash-poor and with very little equity price to throw around. Investors deliver your share cost to successfully zero, additionally the worth of dozens of many years of work and around $50 million in annualized incomes becomes nil.(*)MariaDB produces a example that is two-part. First, it’s a reminder of the exuberance that led to SPAC deals that were, in retrospect, too expensive and poorly timed. Second, it shows that not all software companies that reach modest scale, say annualized revenue of $25 million, are going to keep growing at a pace that is sufficient maintain as a public company.(*)Beware unique discounts in heady times, and count your future never ARR development as specific — even though you get to important development thresholds.(*)
