Popular online note-taking service, Evernote, has been building an incredible reputation and user base since 2007. The success of the startup has led many IPO rumors to hit the markets but no such move has been made by the company’s head honchos. Evernote CEO, Phil Libin, claims that he wants to keep from going public as long as possible. The latest round of $85 million in funding is another indication that Libin and Evernote are staying away from the IPO route for the time being . The new found cash will be used to put some money in the pockets of insiders and pay back investors who had bet on the company early on in the startup cycle.
Only 25% of the total amount raised will be put into company accounts. This is a large change from the previous funding round in which the entire $70 million was injected into the company.
Evernote’s note based service is free, with the only money the company makes comes from a paid version that has more features for users. That is why the cash-out deal like the one Evernote just completed is controversial. If the money is going to investors, it is not being used to build the company and in doing so, indirectly help to generate more revenue. A recent cash-out disaster story comes from Groupon which raised $950 million at the end of 2010 and gave $809 million of that cash out employees and investors. The company’s stock has since taken a big fall leaving investors wondering if the move was the right thing to do.
Libin defended the move by saying that the company wants to “rotate out anyone with a short-term horizon” in favour of investors with long term goals.
Source: Business Insider
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