Okta came out of the gate strong today in its Wall Street debut, attracting the type of institutional investors CEO Todd McKinnon says should be around for the long haul. This IPO comes at a time when Wall Street appears ready to embrace enterprise technology companies.
Okta set its price yesterday at $17 a share, raising at least $187 million. The firm could raise more if its underwriters trigger their ability to buy more shares at the original IPO price, which seems like a no-brainer, given Okta’s strong first-day performance.
Okta is a cloud identity management company that helps large companies’ users connect securely to cloud services, while easing the burden of signing into multiple applications. The unicorn is a pure cloud company with a classic subscription model, an approach that seems to be finally well understood by public market investors.
It’s been quite a year so far for enterprise IPOs, as Okta joins Alteryx and MuleSoft in going public, with Cloudera (which filed a week ago) and Yext on deck.
Batter up
McKinnon said with the dearth of IPOs last year, he felt like there was pent-up public market demand for new offerings, something that worked in his favor. But it was more than that. The CEO also noted that institutional investors came ready to play in his company’s IPO, and they had done their homework regarding the state of cloud technology.
“What was interesting was the number of high-quality long-term mutual funds that were interested,” McKinnon told TechCrunch. “It’s a testament to what we’ve done and the knowledge of this model, the cloud in general and why we are important to that story long term,” he said.
McKinnon admitted that portfolio managers’ high-level knowledge of the cloud took him somewhat by surprise. Perhaps that’s because nearly everyone in the business world today uses one cloud application or another. It’s hard to avoid Office 365, G Suite, Salesforce, Box, Workday and the other large cloud services.
Certainly managing identity is paramount to that story, and a technology that crosses every cloud service. It’s imperative to ensure that only an authorized individual can sign into a particular service. Yet you also need to make it simple enough to access multiple applications without putting…