Oct 27, 2017

Forescout IPO shows downside of "unicorn" stock structures

Via Nasdaq

Silicon Valley cybersecurity company ForeScout last night raised $116 million in its IPO, pricing 5.3 million shares at $22 each. By most measures it was a roaring success, given that the company had only planned to offer 4.8 million shares at between $20 and $22. Initial market cap of $806 million, and a fully-diluted market value of $1.23 billion.

But there is a bit of a catch, related to the fine print on its company's final round of venture funding, a $79 million Series G infusion led by Wellington Management in early 2016.

Please explain: The Series G stock was sold at $23.73 (split-adjusted), an included a quasi-ratchet provision whereby Forescout must issue Wellington additional common stock if the IPO priced below $29.66 per share (which, of course, it did). Earlier investor Aspect Ventures gets a bit of make-up too, but all the other pre-IPO shareholders get diluted a bit (as noticed by the folks at EquityZen).

Lesson learned: That Series G round gave Forescout a post-money valuation of $1 billion, which enabled it to get extra headlines. But the structure piper must eventually be paid and, for Forescout, the bill came due today.

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U.S. coronavirus updates: Death toll passes 9,500

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

Recorded deaths from the novel coronavirus surpassed 9,500 in the U.S. Sunday evening, per Johns Hopkins data. The death toll in the U.S. has risen over 1,000 every day since April 1.

Why it matters: U.S. Surgeon General Jerome Adams said on Sunday that this upcoming week will be "the hardest and saddest week of most Americans' lives" — calling it our "our Pearl Harbor, our 9/11 moment."

Go deeperArrowUpdated 1 min ago - Health

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 7:30 p.m. ET: 1,270,069 — Total deaths: 69,309 — Total recoveries: 259,810Map.
  2. U.S.: Total confirmed cases as of 7:30 p.m. ET: 335,524 — Total deaths: 9,562 — Total recoveries: 17,266Map.
  3. Federal government latest: Surgeon general says this week will be "our Pearl Harbor, our 9/11 moment." The USDA confirms that a Bronx zoo tiger tested positive for coronavirus.
  4. 2020 latest: "We have no contingency plan," Trump said on the 2020 Republican National Convention. Biden says DNC may have to hold virtual convention.
  5. States updates: New York Gov. Andrew Cuomo said the state is "literally going day-to-day" with supplies.
  6. World update: Queen Elizabeth II urges the British people to confront pandemic with "self-discipline" and "resolve" in rare televised address.
  7. What should I do? Pets, moving and personal health. Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Scoop: Inside the epic White House fight over hydroxychloroquine

Photo: Drew Angerer/Getty Images

The White House coronavirus task force had its biggest fight yet on Saturday, pitting economic adviser Peter Navarro against infectious disease expert Anthony Fauci. At issue: How enthusiastically should the White House tout the prospects of an antimalarial drug to fight COVID-19?

Behind the scenes: This drama erupted into an epic Situation Room showdown. Trump's coronavirus task force gathered in the White House Situation Room on Saturday at about 1:30pm, according to four sources familiar with the conversation. Vice President Mike Pence sat at the head of the table.

Go deeperArrowUpdated 37 mins ago - Health