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In a direct listing, Spotify won't issue new shares, and thus, it won't raise any capital in the process.
Although no equity capital is raised by the company in a direct listing, after trading is established the company could do a follow-on offering to raise money.
Spotify had no lock-up agreement, so the VCs I know love this feature, but it is not inherent in a direct listing, and IPOs don't require lock-ups.
Many more will likely have to work a lot harder to persuade the capital markets to participate in a direct listing and even if successful, may ultimately come back to bite them as they evolve and require additional capital markets cooperation.
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Spotify's "Family Plan," a variation of which launched in 2014, as well as its "Student Plan" appear to be driving a significant portion of the company's growth and improving retention, as the company points to it multiple times in its filing for a direct listing on public markets today.
While Spotify's direct listing in 2018 and recent reports that Slack is considering a direct listing in 2019 have heightened curiosity around this approach to "going public," we expect that most issuers in the near-to medium-term will continue to pursue a traditional IPO path.
In April last year, Spotify stock started to trade without a formal IPO, in what is known as a direct listing.
Spotify just filed for a direct listing in the U.S., sidestepping the traditional IPO process, and now we're starting to see some of the true financial guts of the company — and some of the significant risks it faces from challenging services from Apple and Google.
It was packed with Canadian companies in search of capital either through a direct listing (difficult, given profitability requirements at the Hong Kong stock exchange) or a partial investment by a cash-laden, resource-hungry Chinese firm.
Slack is losing its chief product officer, April Underwood, ahead of a direct listing expected in 2019.
The highly anticipated and successful IPO by Dropbox (DBX) in March and Spotify's (SPOT) direct listing in April have put a spotlight on the U.S. tech IPO market.
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