Startup Unicorn Casper Sets IPO Price Range to Dish Out 36% Loss to Prior Investors

Startup Unicorn Casper Sets IPO Price Range to Dish Out 36% Loss to Prior Investors

Another money-losing, cash-burning, over-hyped unicorn in a ho-hum low-tech business (bedding retailer) tries to make it out the IPO window while it still can.

By Wolf Richter for WOLF STREET.

It’s tough out there for money-losing, cash-burning startup unicorns that have multiplied like rabbits in recent years. Casper Sleep Inc., which sells foam mattresses and bedding, filed its amended IPO prospectus with the SEC today, with further details on its hoped-for IPO. It will offer to sell 8.35 million shares – and up to 9.6 million shares if the underwriters exercise their over-allotment option in full – at a price range of $17 to $19 a share. An IPO price of $18 a share (with 39,178,344 shares outstanding) will give the company a valuation of $705 million.

This is down 36% from its pre-IPO valuation of $1.1 billion, set at the last round of funding on March 27, 2019, when it had raised $100 million. The share price that investors paid at the time elevated the company into the unicorn cloud.

The timing of that round of funding was very propitious: Two days before the now infamous Lyft IPO on March 29, whose shares plunged 10% in six hours, from the superbly artificial pop to the close. Lyft shares today, at $47.36, are down 47% from that IPO pop. And the IPO world hasn’t been the same since.

But investors in Casper made their deal two days ahead of that Lyft spectacle. These investors that plowed $100 million into the company at a valuation of $1.1 billion included prior investors Target, New Enterprise Associates, and Norwest Venture Partners; and new investors Canada Goose CEO Dani Reiss and Crate & Barrel co-founder Gordon Segal.

Since it’s founding in April 2014, the company has raised $340 million in seven rounds of funding.

Casper has always been about marketing. It sells foam mattresses that are shipped squeezed tightly in a box. All kinds of companies are selling foam mattresses. More recently, it has started selling sheets and duvets and pillows and what not, the kind of stuff that countless online retailers are also selling, including manufacturers in India selling directly to US consumers on platforms such as Amazon.

But Casper’s marketing – very costly marketing – was so effective that it came to my attention in November 2014, just months after its founding. At the time, I received a thick envelope in the mail, addressed to “Resident” and titled “San Francisco Offers.” I opened it! Whoever was trying to get through to me, made it. The envelop contained six glossy, multicolored sheets, each for a different company, all of them startups.

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Wolf Richter

In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China. WOLF STREET is the successor to his first platform… TP-Title-7-small-200px …whose ghastly name he finally abandoned in July 2014. Here’s the story on that. Wolf lives in San Francisco. He has over twenty years of C-level operations experience, including turnarounds and a VC-funded startup. He earned his BA and MBA in Texas and his MA in Oklahoma, worked in both states for years, including a decade as General Manager and COO of a large Ford dealership and its subsidiaries. But one day, he quit and went to France for seven weeks to open himself up to new possibilities, which degenerated into a life-altering three-year journey across 100 countries on all continents, much of it overland. And it almost swallowed him up.