Qualtrics waits on that IPO, creates $180 million at a $2.5 billion valuation instead

That Qualtrics IPO many have beenexpecting is on hold for now. The online market research platform has just raised the work of its third round for $180 million at a whopping $2.5 billion valuation.

The Provo, Utah-based company came from much humbler beginnings, bootstrapping the operation for a decade before eventually taking financing from Sequoia and Accel in 2012. It has blown up since then, hitting unicorn valuation status two years later, with $150 million in annual revenue. The company now tells me its hitting somewhere north of $250 million in revenue this year.

On the outside, the company looks pretty healthy. Founder Ryan Smith tells me Qualtrics is profitable something not many tech companies, evensome that going to go public recently, can be argued. Many, including myself, have theorized, based on those fiscals and a few other indicators, the company may have been attaining plans to go public in 2017.

While that could still be in the cards, its also not unheard of for a company to create one final round before diving into the public market. Mulesoft picked up another $128 million ten months prior to filing in March, for example.

And Smith has said he plans on going public. It looks like hes feverishly working towards that goal. Five months ago the startup hired Microsoft veteran Zig Serafin as its COO and just added Atlassians CFO Murray Demo, who helped guidebook that company through its initial $4.4 billion public offering, to the board of directors. Companies often pull in key leadership just before going public and Qualtrics founder Ryan Smith told TechCrunch in a recent interview he was get his house in order in preparation for an IPO event.

An IPO isnt an exit. It should be the beginning and we wouldnt be going out if we didnt think that more wealth could be created post-IPO .

— Ryan Smith, Qualtrics

Couple that with a market that has been referred to as a perfect blizzard for filing and it might seem a head-scratcher why Qualtrics would take another round, diluting its equity instead of going public.

But an IPO might have been on the table before Smith decided to go for one more round. Insight Ventures Jeff Lieberman told TechCrunch hed discussed with Qualtrics all different options.

[ Qualtrics] clearly has the right financial profile. Its all been about positioning.[ Smith] doesnt simply want to be a public company. He wants to be an excellent, market-dominating company, Lieberman said.

But all may not be as it seems, according to Kathleen Smith, a principal at Renaissance Capital whos been analyzing IPOs for the past 20 years. If you are taking rounds of financing and theyre done at high valuations you may be hesitant to run because you may have to do an IPO down round, she says. If you do a round at $2.5 billion, youre not going to want to raise money publicly below that.

Silicon Valley, she says, has shifted to higher valuations and the public marketplace has become more valuation sensitive over the last few years. Thats one reason she thinks some of the tech companies have been slower to move forward than expected.

Smith, the IPO analyst, also cautions the company may not be session gain expectations, even with revenues in the hundreds of millions. But thats nonsense to Qualtricss Smith, who counters hes not public yet because he doesnt have to be. We raised the money because we can, he told, pointing out other enterprise unicorns have done the same thing before going public.

An IPO isnt an exit. It should be the beginning and we wouldnt be going out if we didnt think that more wealth could be created post-IPO, Smith said.

He also told me he wants to reach revenue in the billions before an IPO event. Side note it took the company a bootstrapped 10 years to reach $50 million in revenue in 2012 and another five years to get to more than $250 million so we might be waiting a few more years for Qualtrics to make that goal.

* Qualtrics wanted to clarify Smith meant it is hard to be a billion-dollar revenue company without going public .

But lets set aside IPO speculation for now and talking here this latest round of funding. Previous investors Sequoia, Accel and Insight Venture Partnerscame back again for the financing and now stimulates Qualtrics the biggest investment Accel has ever put money into.

In addition to putting money on the balance sheet, the round also permits Smith to provide some liquidity for early the workers and hire more in the C-suite, including a chief financial officer in the near future.

Qualtrics has also only launched what it calls the XM Platform, its own experience management platform Smith believes will one day be as ubiquitous as Workday or Salesforce software in every office, but for managing internal feedback and helping organisations uncover key business drivers, predict future client wants, and retain employees.

Qualtrics is an outlier, Sequoia Capital partner Bryan Schreier said in a statement. They have delivered outstanding, accelerating growth at nine-digit revenue numbers all while remaining cash flow positive. That is practically unheard of. Its an incredible sign of confidence in Qualtricscontinued growth trajectory and the huge market for its new XM Platform that all of its investors have come back to buy as many shares as they could at this new valuation.

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