Eric Lefkofsky knows the general public listing rodeo well and is about to enter it for a fourth time. The serial entrepreneur, whose net price is estimated at nearly $4 billion, has already taken three businesses he’s founded public.
Today he’s the founding father of Tempus, a genomic testing and data evaluation company preparing to IPO. But he’s best often called the co-founder of each day deals pioneer Groupon, which went public at a valuation of nearly $13 billion in 2011, in one among that yr’s most high-profile debuts.
Groupon’s IPO and post-IPO years were infamously troubled, though the general public listings of his other two corporations — InnerWorkings in 2006 and Echo Global Logistics in 2009 — didn’t raise significant flags for investors and did well for Lefkofsky. InnerWorkings, a supply chain startup he founded in 2001, sold to private equity in 2021 for a fraction of its IPO market cap.
Meanwhile, the stock of Echo Global Logistics appreciated steadily during its 11-year public life history before also being sold to personal equity at a 50% premium over its last trading price in 2021.
Among the controversies with Groupon involved a report that Lefkofsky pocketed over $300 million from Groupon’s pre-IPO round, leaving little working capital for the corporate, and cutting its reported revenue in about half in revised S-1 filings after regulators scrutinized the financials in its initial S-1. That unorthodox decision has also delivered to light one other deal from his past. He sold his dot-com-era company Starbelly.com in 2000 to a 50-year-old company; a yr later, that company filed for bankruptcy, in line with some reports.
All of this has given Lefkofsky the repute of getting somewhat of a golden touch, at the very least for himself, but perhaps not for long-term investors of his corporations.
With Tempus, Lefkofsky is taking one other shot at making a long-lasting, invaluable company. It was reportedly his wife’s successful breast cancer treatment that led him to found Tempus in 2015.
“I used to be perplexed at how little data was an element of her care,” he told Forbes last yr. “I became fixated with this concept that there was all this technology that had been created for other industries that may very well be applied to cancer care and help physicians make data-driven decisions.”
He stepped down from Groupon’s CEO role in 2015, when the corporate’s value had fallen to $2.6 billion. (Groupon’s market cap today is around $600 million.) At the moment, Lefkofsky focused his attention on an early-stage enterprise firm, Lightbank.
Interestingly, the Tempus S-1 filing says that he’s taken no salary for the past two years (the S-1 didn’t provide greater than two years’ price of executive compensation for any named officer). Nevertheless, the filing also said that he’s because of be paid $800,000 and an $800,000 bonus starting in 2025. And, although he wasn’t drawing a salary, he was paid a $5.3 million dividend from company stock this yr, the prospectus shows. The filing also showed that Tempus has also covered the associated fee of $7.5 million price of preferred shares issued to him and has paid $200,000 for his private plane expenses.
Tempus’ revenues were $531 million in 2023, a 66% growth from $321 million in 2022. But the corporate remains to be hemorrhaging numerous money, with net losses of $290 million (in 2023) and $214 million (in 2022). Although, the silver lining in its financials is that operating loss margin has shrunk from 83% in 2022 to 37% in 2023, in line with the S-1 filing.
Moreover, Tempus has an agreement with Pathos AI, one other company Lefkofsky founded. Pathos AI is a drug discovery platform founded in 2020. Pathos pays Tempus for a right to license its data. Meanwhile, Tempus’ COO, Ryan Fukushima, serves as Pathos’ CEO and splits his time between the 2 corporations.
There are other indications that Lefkofsky is exercising more power at Tempus than is customary.
While Tempus has not yet filled out its principal stockholder’s chart, revealing only that Lefkofsky is amongst them and owns at the very least 5% of the corporate, the billionaire clearly desires to preserve full control of the corporate after it goes public. Tempus has granted his shares a whopping 30 votes per share. Super voting shares aren’t unusual, but 10 votes per share is more common, with 20 votes considered high. So that is an unusually high shareholder influence for a CEO of a healthcare company, and we’ll must see whether it is reduced in future S-1s, indicating whether prospective investors have balked at it.
Yet, Tempus’s S-1 will not be exaggerating how essential Lefkofsky is to the longer term of the corporate. A healthcare VC investing in corporations in genomics and data evaluation has told TechCrunch that Tempus wouldn’t have grown to its size, nor garnered a lot capital without Lefkofsky’s marketing and fundraising skills.
Tempus raised $1.42 billion in funding from investors, including his firm Lightbank, in addition to from NEA, Revolution Growth, T. Rowe Price, Novo Holdings, Franklin Templeton and Baillie Gifford. The corporate was last valued at $8.1 billion in October 2022. Tempus’ S-1 filing also revealed that it recently received $200 million from SoftBank.
No matter how much capital Tempus raises in its IPO, the corporate’s prospectus made it clear that it’s still removed from breakeven and can need “to lift additional capital in the longer term.” While most unprofitable corporations generally include this detail of their prospectuses, it is probably going that investors will expect Tempus to have a follow-on public offering in some unspecified time in the future, which may very well be a drag on their share price.
Tempus can also be attempting to position itself as an AI company regardless that AI revenue accounted for less than $5.5 million of revenue, roughly 1% of total revenue in 2023.
“I see Tempus gambling on their growth and ripe timing for AI across life sciences, but I don’t think the corporate has proven that yet with their current offering,” the healthcare investor said.
The corporate said in its S-1 filing that while its “AI product line is nascent, it plans to embed AI, including generative AI, in every aspect of its diagnostic tools.” Tempus declined to comment beyond what’s listed within the S-1.
