Colorado’s startup community rallies behind Ibotta as Denver’s popular consumer app has IPO (2024)

After nearly a decade of developing what had become one of the most popular consumer mobile apps to call Denver home, Ibotta switched gears to focus on a different customer: big retailers.

The company signed a deal with Walmart in 2021 to build the same cash-back and coupon technology Ibotta was known for right into the massive retailer’s own mobile app. Ibotta has since added more retailers in deals that have contributed immensely to the company’s bottom line.

That move, apparently, led founder Bryan Leach to decide the technology, the financials and the timing were finally right to go public. Ibotta debuts today on the New York Stock Exchange, where Leach is set to ring the bell to open the market in front of 149 friends, investors and colleagues. The company could only invite 150 people. One-third of the invites went to current and former Ibotta employees. Full-time employees earned stock options over the years.

“By my calculations, I believe there’ll be over 150 people who make at least a million dollars on this IPO,” Leach said. “Many of them are in Denver.”

Ibotta, profitable for the past seven quarters thanks to its evolution, is one of those rare tech startups that was founded in Denver, grew larger, felt pain, shrank some, kept at it and made it to an initial public offering, or IPO — all while staying in the city. It’s not the first local IPO, of course, but one from a company that’s familiar to millions of consumers who use Ibotta’s app to save money when shopping. It’s also a pivotal moment for the region that has local entrepreneurs and investors feeling the excitement.

“There’s definitely a buzz about Ibotta’s IPO,” said Eric Marcoullier, the founding CEO of Gnip, which Twitter acquired in 2014, and who now coaches young founders. “A rising tide raises all boats and a lot of my early founders are over the moon to have a homegrown success story to emulate. Starting a company requires a certain delusion around the odds of success and Ibotta is helping reaffirm a lot of founders’ beliefs that they too can build something meaningful.”

What it was like to start in Denver

As Ibotta’s origin story goes, Leach was flying back to Denver in 2011 after attending a legal conference in Rio de Janeiro. He’d spent the conference feeling bored and wondering if being a lawyer was what he wanted to do for the rest of his life. The young attorney had clerked for a Supreme Court justice, graduated from Yale Law School and made partner at a Denver law firm before he was 34.

He spotted another passenger taking pictures of receipts for their business expenses. And he began thinking about all the data on a receipt and how companies could get smarter about appealing to consumers to change their shopping habits at the grocery store, and how it could help people save on everyday purchases. He left law the following year to start Ibotta.

Early hire Luke Swanson, who joined Ibotta in April 2012 to help build the app, is still with the company. As its chief technology officer, he oversees the tech and product development teams of nearly 400 people. But back in those early days at an office on 18th and Blake, there were just four or five people building the first app.

“We would sit in the basem*nt and write code,” said Swanson, who had been an early employee and vice president of engineering at image-hosting site Photobucket. “It was during the summer and we would set up a table in front of our office and as people were walking to the Rockies games, we would give away bottles of water.”

The free water came with a request: Take a photo of a receipt and share the experience.

“And then we’d go back down to the basem*nt and fix things and come back up a couple days later to get more feedback,” Swanson said. “It showed the kind of entrepreneurial state we were in to just get feedback from people walking by and hear their excitement about what we were building.”

Within its first 75 days, the app attracted 100,000 users and since then, Ibotta has had more than 50 million registered users, according to its S-1 filing with the U.S. Securities and Exchange Commission.

But beyond consumers, Ibotta also invested in Denver. At the 2015 Denver Startup Week, Leach went onstage and announced that Ibotta had just raised $40 million and planned to triple its downtown office space, as well as hire another 200 to 300 people. At the time, it employed about 100 people. At the end of 2023, it had 815 full-time workers. It’s still headquartered at 1801 California St.

“I remember very clearly Bryan speaking at Denver Startup Week. I also remember when he was transitioning and making the decision to launch the company,” said Tami Door, a cofounder of Denver Startup Week and the CEO of the Downtown Denver Partnership for 17 years before stepping down in 2021. She had met Leach when he was a lawyer and recalled his vision, which made walking away from a successful career a lot less crazy than it sounds.

“I remember leaving that conversation with Bryan thinking that people really need to be reminded that they can step out of whatever they’re doing to pursue something else and take a risk,” Door said. “He knew what he wanted to do. And it was clear, and it certainly played out.”

Finding local investors, however, was more of a challenge. Local venture capitalists, like Foundry Group in Boulder, all passed. Leach found support from family and well-known family friends, like Netscape co-founder Jim Clark and Larry Sonsini, an attorney whose firm helped take Apple, Google and Twitter public. The last investment round in November 2019 added Koch Disruptive Industries and valued Ibotta at $1 billion.

“I was asked every time I was in California, at (venture capital firms) Sequoia or Kleiner or Khosla, ‘Wait, aren’t you from Denver? Do you have any talent in terms of engineers in Denver? Shouldn’t you be in Boulder? Wait a minute, (Foundry Group’s) Brad Feld is not on your cap table?’ There were a lot of geography questions at the time,” Leach said. “We don’t get those anymore.”

As for the local firms that all said no? “It’s no hard feelings,” Leach said. “We’re all friends now.”

Colorado has had an outsize share of VC-backed companies and dollars compared with the rest of the nation, though it’s nowhere close to the leading states of California, New York and Massachusetts. Colorado has ranked in the top 10 states for deals and dollars for the past decade, according to PitchBook, a research firm that tracks public and private venture investments. Last year, the state ranked fifth, pulling in $3.9 billion spread over 409 deals.

Foundry Group, which backed Gnip, SendGrid and numerous other Colorado companies, was founded on the belief that great companies can be built anywhere, especially outside of Silicon Valley. The venture firm is now in its final fund and some of the greats were overlooked, said Seth Levine, who founded Foundry in 2006 with Feld and others.

“It is absolutely true that we looked at the business a number of years ago and decided not to invest. In venture, you’re wrong with alarming frequency, and Ibotta is a great example of this. But (Ibotta’s) also an example of how the relationship between a venture investor and CEO can stay strong despite not coming to agreement on investing. I’m fortunate to call Bryan a friend and glad that our relationship is stronger now than it was when Foundry decided not to invest,” Levine said in an email. “And, of course, he and Ibotta get the final word on this matter!”

Why go public?

On Tuesday, Ibotta raised its public stock offer to 6.56 million shares, as existing investors offered nearly 1 million more, according to an SEC filing. On Wednesday evening, the company announced that shares under the ticker symbol IBTA will be offered at $88 each, or higher than the initial estimate of $76 and $84.

At $88 per share, Ibotta would raise $577.3 million and be valued at more than $2.6 billion, according to a Bloomberg report. That’s also well above another recent tech IPO, social-media site Reddit, which was priced at $34 last month. It ended its first day up at $50.44, but had dropped to $39.17 on Wednesday.

Ibotta’s outing comes in a quarter just after the global market experienced the lowest number of quarterly IPOs since the second quarter of 2020, according to S&P Global’s Market Intelligence report. The number of publicly traded companies has been nearly halved since the mid-1990s, according to JPMorgan Chase & Co., whose CEO Jamie Dimon recently bemoaned the diminishing role of public companies in America’s finance system.

“It’s still a difficult time to tap into the public markets,” said Rudy Yang, senior emerging tech analyst for PitchBook. “There are mixed returns and not every company is performing well. What we have seen, however, is that investors are valuing both growth and profitability. So, the companies that can consistently deliver top line growth, expand margins and grow their bottom lines are being rewarded.”

That could be Ibotta too, Yang added. “Ibotta has a fair shot at performing well despite its influence from consumer spending,” he said. “Retail sales were strong in March and the company’s unit economics appear to be solid with increasing revenues, margins, net income, and a growing user base.”

Consumers are still a big part of Ibotta’s business, but after adding the large retailers, the company recently posted its seventh consecutive quarter of gross profits, Leach said. Last year, revenues increased 52% to $320 million, while net income improved to $38.1 million, compared with the prior year’s net loss of $54.9 million, according to Ibotta’s SEC filings.

Ibotta has been one of the top venture-backed companies in Colorado likely to go public, according to PitchBook’s VC Exit Predictor tool. The AI-based tool tracks company data, such as patents, employee count, news coverage and type of industry. It’s also been trained on 45,000 observations of startups with a known outcome, such as going public, getting acquired, or not going anywhere. Ibotta’s chances of a 58% successful IPO is based on its last funding round in November 2021, which is a bit off now. But it’s just a tool, PitchBook officials said.

It’s a small world. Another company on the list is Guild, a Denver education-tech company founded in 2015 that is now also a “unicorn,” because of large funding rounds and a multi-billion dollar valuation. Guild’s new CEO, Bijal Shah, originally moved to Denver in 2014 for Ibotta to become its director of analytics. She credits companies like Ibotta for creating a place attractive to tech workers.

“As a former leader and alum of Ibotta, I am so proud of everyone who has contributed to the journey. Bryan and Luke have had a tremendous impact on the Denver tech and startup landscape, demonstrating what’s possible for founders looking to grow their businesses in Denver,” Shah said in an email.

Still, many companies have chosen to leave or stay out of the public eye, which is blamed for the decline in public companies. That’s true close to home, too. Ibotta’s old office neighbor, SendGrid, went public in 2017 only to be acquired by a San Francisco company two years later. Another neighbor a few blocks away, Ping Identity, went public in 2019 before private equity purchased it in 2022.

An increase in regulatory requirements also has contributed to a market that’s less attractive for companies, said Shaun William Davies, associate professor of finance at the University of Colorado’s Leeds School of Business.

“A lot of that gets back to the regulatory costs of being a publicly traded company,” Davies said. “After all the fraud in the early 2000s with Enron and all that, Congress passed the Sarbanes–Oxley Act, which put an incredible burden on publicly traded companies with all the regulatory hoops they had to jump through. With the compliance cost, a lot of firms said it’s not worth it. … We’ve seen just this massive consolidation of a lot of firms going private through all sorts of different private equity vehicles because it’s just cheaper to run a private company.”

Going public or getting acquired are just part of the venture-backed lifecycle, said Natty Zola, a venture capitalist at Matchstick Ventures in Boulder. And to have a big exit like this in Denver helps inspire the local startup community.

“We know we have great companies here, but they also have to generate real exits, and this is just another proof point on the quality of the startup and business ecosystem here,” Zola said. “I know a bunch of startups excited by further proof points they can point to about the quality here.”

Added Matt Talbot, a cofounder of GoSpotCheck who’s behind a new finance startup called Cast, “There’s no doubt that it’s every founder’s dream to build a company that can scale to that point where you get to ring the bell and introduce your company to public investors. It’s so cool to see and I love seeing good things happen to good people. And Bryan is such a high-quality person who has given so much to the community and has been a leader to admire. There’s nothing more gratifying than to see somebody beating the odds.”

Leach said that it took Ibotta several years to find the right business model and prove it out. After expanding to enterprise customers, Ibotta hired Sunit Patel as chief financial officer three years ago. He said Patel had “spent 66 quarters in a row at a public company” as CFO at Level 3 Communications and CenturyLink and then T-Mobile, where he oversaw T-Mobile’s merger and integration with Sprint. Patel knew all about regulations, compliance and audits.

The timing is right for the company to go public, Leach said. But it’s also a little personal.

“My father’s company went public when I was a junior in high school and I had kind of a front-row seat to the roadshow and had an incredible experience,” Leach said. “I would say that it’s always been my dream to be a public company, to have founded a public company. It’s the whole arc of the journey, from idea to ringing the bell to public company CEO. I told investors back in 2011, 2012, that that was our ultimate aspiration.”