Streaming media player maker Roku filed its S-1 Registration Statement with the SEC earlier this month, signaling its formal intention to go public in the near future. Companies often amend their S-1 Registration Statements following that initial filing to fill in blanks and add other pertinent information, and Roku has just done that.
Here’s what investors need to know from the amended S-1.
Roku could raise up to approximately $160 million
The most notable change is that the proposed maximum proceeds have increased from $100 million to potentially $252 million, which would be raised from selling 18 million shares at $14 per share. Those figures represent the current anticipated maximums, and are still subject to change.
The company expects that the IPO will price in the range of $12 to $14. Keep in mind that if Roku ends up selling $252 million worth of stock, it won’t be getting all of those proceeds. Of the potential total of 18 million shares being sold, 6.67 million shares are being sold by existing shareholders (early venture investors).
Menlo Ventures, which invested in Roku in numerous funding rounds over the years, is looking to sell 6 million shares. That firm currently has the largest stake in Roku, with 35.3% of Class B shares — even more than founder and CEO Anthony Wood’s 28.4% stake — which will fall to 30.1% following the offering. Sky Ventures Limited plans on selling 668,000 shares out of its 3.3 million Class B shares.
Roku itself is only planning on issuing and selling 9 million shares, although underwriters will have an option to purchase an additional 2.35 million shares depending on investor demand. If all underwriter options are exercised and shares are priced at $14, then Roku will raise approximately $160 million to add to its balance sheet, with Menlo Ventures and Sky Ventures bringing home the remaining roughly $94 million.
These figures are also subject to change, if other insiders choose to sell, and would be reflected in subsequent amendments.
The other significant blank that was filled in relates to voting power. We already knew that Roku was hopping on the dual-class bandwagon, like so many tech IPOs these days whose insiders seek to maintain control. What was less clear is how domineering that power would be, and now we know: “Outstanding shares of Class B common stock will represent approximately 98.1% of the voting power of our outstanding capital stock immediately following this offering, with our directors, executive officers and principal stockholders representing approximately 97.1% of such voting power.”
Of that, Wood will single-handedly control 32% of total voting power after the offering, with Menlo Ventures controlling 30.1% of total voting power. Investors are unfortunately getting all too accustomed to taking a back seat in corporate governance matters, and a single token vote per Class A share is useless in practice, but there’s not a whole lot that public investors can do about it (other than opting not to invest).
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