What to think of Viadeo’s €200-300 Million IPO plans?

May 30, 2014
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This week Viadeo announced in an interview with LeFigaro that they would be seeking to raise €200-300 million on the Euronext in a Paris IPO early next year. Viadeo, which competes with LinkedIn and Xing as a professional network, owes much of its success to France, where it first started as an online network for French entrepreneurs. as well as China, a market that it beat LinkedIn, too – the latter, however, does not account for much of their revenue.

The move, which Reuters called “test[ing] the appetite in Paris for Tech IPOs,” has big implications for the Paris tech scene. On the one hand, if successful, Viadeo’s IPO would be the biggest since real estate site SeLoger IPO’d in 2006. The later’s 220M€ IPO was succeeded by their 2011 acquisition by German media giant Axel Springer – the founders have since gone on to raise €4.3 Million for their latest project, SeFaireAider.com (I sense a theme).

If Viadeo is successful in their IPO, it will be a great sign for Paris and its future exit possibilities. For now, the biggest exits, whether they be acquisitions or IPOs, have had one thing in common: the U.S.A. If Viadeo can prove that there is an appetite among Paris investors for technology IPOs, then we might be seeing future IPOs – eBuzzing & Teads, for example – in Paris, in addition to New York.

Of course, as one venture capitalist pointed out to me, Paris’ biggest weakness in terms of a public stock market is that French citizens don’t put their money in the stock market. They prefer safer, more stable investment vehicles – I wonder if France will incentivize this?

All that said, I’m not saying “throw your money at the next LinkedIn!” (LinkedIn, by the way, has seen great growth since its IPO, although 2014 has seen the stock drop from 260 to 160 in a matter of months).

Meanwhile, Viadeo’s IPO doesn’t sit well with me, mostly because, as with all IPOs, it feels like a cash-out for investors, which include IDInvest, Ventech, and, oh yeah, France’s Sovereign Wealth fund (now rolled into BPIFrance). Viadeo is seeing increasing competition from LinkedIn in its home market of France, while its largest growth market, China (20 Million members, against LinkedIn’s 4 Million members), isn’t paying. That said, I think their strategic investment in China and other Asian countries is quite smart – it’s only a matter of time before those markets mature, after which Viadeo will have the same leverage over the Asian professional community as LinkedIn has over the professional community in Europe & North America (and, increasingly, in Asia).

Viadeo counts 60 Million members, next to LinkedIn’s 283 Million members. At the time of LinkedIn’s 2011 IPO, which saw the company valued as $4 Billion (currently valued as nearly 4x that), at the time it had taken in a $15M profit in 2010, the year prior to its IPO. Viadeo, on the other hand, lost €13 Million last year – 6 Million of which went to acquisitions in China, 2 Million to technology. Viadeo’s ‘technology,’ by the way, pales in comparison to LinkedIn – and that’s saying a lot, considering the only thing stopping LinkedIn from being my social network of choice is the utter inability to stay on the site longer than 5 minutes, whether it be the unbearable newsfeed of the ugly company pages – c’mon LinkedIn, I’m really trying here.

Anyway, Viadeo’s IPO leaves me with mixed feelings. On the one hand, I don’t have a Viadeo account – and that’s saying a lot, for a tech blogger covering the French tech market. A lot of the service’s core functionalities leave me uneasy, like how you can’t view public profiles without logging in (see my outdated, dormant profile here). If Viadeo hopes to defend against LinkedIn, it’s going to have to do more than acquire startups that get banned from LinkedIn’s API – it needs to be enjoyable to use.