ServiceTitan and the Impact on the Triangle: The IPO Window is Open!

Plus: Holiday schedule and a Tweener Startup Community Hub Update.

Dec 17, 2024

Apologies that this issue is a day late. It’s a long story involving a puppy, Santa, and Crabtree mall too close to Christmas.

Before we jump into today’s main topic, I wanted to cover a couple of administrative items…

Tweener Times and Talks Holiday 2025 Schedule

Tweener Times Newsletters: There won’t be a newsletter on 12/23, next Monday. We’ll have a guest post for 12/30 and be back on 1/6/25 to kick off the new year.
Tweener Talks podcast: This Thursday, 12/19, we’ll have our normal weekly Triangle Talks podcast release. This will be the last podcast of 2024. We’ll be back in 2025 and kick off the year with a **BIG** drop on Thursday 1/2/25.

Triangle Tweener Startup Community Hub Update…

Last week, we announced the launch of the Tweener Startup Community Hub -you can find it at the top of our tweenertimes.com site, or directly go there via www.tweenerhub.com .

Since the announcement, the community has really engaged with the Hub. We’ve added:

10 new Startup Services

Mentors: +3
Design resources: +3
Coaches: +2
Recruiting: +2
Accounting: +1
Legal: +1

New ideas:

Adding: Mental health resources for founders
Enhancements to the jobs/candidate section
Requests to add new services types we’re considering.

Thanks everyone for the feedback, keep it coming!

The Tweener Times is sponsored by:

Robinson Bradshaw - A full-service business law firm with a passion for supporting the Triangle entrepreneurial ecosystem. Learn more about Robinson Bradshaw’s startups and venture capital practice here.
Smashing Boxes - A Durham based lean design-centric digital transformation company.
Bank of America – BofA’s Transformative Technology Group helps game-changing tech businesses and founders realize their boldest ambitions across a wide range of technology sectors. With hands-on support, world-class resources, and an extensive network – BofA provides the stability and scalability that tech companies need to rapidly grow today and into the future.
EisnerAmper (formerly HPG) - One of the world’s largest business consulting firms, with a dedicated technology practice offering outsourcing, accounting, tax, and advisory services. Our experienced professionals serve more than 2,000 technology companies, from early-stage startups to public enterprises. Discover how EisnerAmper’s stage-specific solutions and industry expertise can help you achieve your milestones whether startup, international expansion, M&A, or IPO: eisneramper.com/tech.

ServiceTitan and the Triangle…

Back on November 25th, when talking about trends for 2025, we mentioned that ServiceTitan had filed for IPO.

ServiceTitan IPO Details

Last week ServiceTitan completed their roadshow and priced their IPO at $72/share. They trade on the NASDAQ under $TTAN.

When the IPO was filed, the price range was $52-57. Then, before the roadshow, the bankers and company raised the price range to $65-67, indicating strong demand for the IPO.

After the roadshow, the company priced well above the range at $72. The company then went public Thursday 12/12 at $101 - a 40% ‘IPO pop’. Monday was the third day of trading and the stock has gone up to $105.27 - another 5% increase.

That’s a strong showing and what the bankers and others want to see - strong demand before and after the issue.

While three days is too short to make any conclusions on this IPO, we’ll need to look past the lock-up expiration which is usually 6 months+.

New Information: Why did ServiceTitan go public before the end of the year.

Before the IPO, some financial sleuths looked deep into the S-1 document and found that ServiceTitan did a Series H fundraise in 2022 and as part of that round agreed to what is called an “IPO Ratchet”. What that does basically is each year the company dealays an IPO, they Series H lead investor’s ownership ‘ratchets up’ which means that because Capital Tables (Cap Tables) are zero sum games, the other owners (Founders, employees Series A-G) thus ‘ratchet down’.

Therefore there was a very very strong incentive for this to go public in 2024 vs. 2025. This is a an interesting case study for founders as it shows the importance of working with investors that are aligned with all shareholders vs. just looking out for their own interests. While we don’t know the circumstances that led to ServiceTitan taking this H round, it certainly had the intended effect that the investor was looking for.

What this means for the Triangle.

You maybe thinking, “What does this Los Angeles company that went public last week have anything to do with the Triangle?” Well good question, here’s how it ties together.

This chart shows the valuation matrix for the ServiceTitan IPO:

Over in the right hand column is the valuation multiples based on the IPO price of $101. They are:

Last year multiple: 16.1x
Trailing twelve months multiple: 13.1x
Next 12 months multiple 11.4x
2027 estimates multiple 10x

In today’s market these are extremely good values for a Software-as-a-Service (SaaS) company.

In startupland, public company valuations set the benchmarks (revenue scale, growth, NRR, etc) that public and private companies are valued from.

The ServiceTitan IPO sets us up going into 2025 not only with a banger of an IPO that should crack open the IPO window AND print a valuation that rolls down-hill to SaaS and non-SaaS companies that raise rounds in 2025. Including those in the Triangle!

Until 2025….

Thanks everyone, have a Merry Christmas and Happy Holidays, we’ll be back in 2025 with lots more startup-friendly Triangle content for you - it’s going to be an exciting year!