Tremor Video filed the paperwork to kick-start a public stock offering in the coming months, revealing a lot of red ink and plans to turn it black with the help of some $86 million of investor money. Credit Suisse and Jefferies are the co-lead underwriters.
The company is the largest independent digital video ad network, with access to 500 digital and mobile platforms. Its value-add is proprietary analytics to help clients, which include the top ten automakers, target consumers more effectively. In 2011, the company lost $21 million; last year, losses narrowed to $16.4 million due to increasing revenue and improving margins.
Filing for an IPO when you’re losing money isn’t completely unusual for a start-up; GroupOn lost $456 million the year before its 2011 IPO, although that’s not the ideal comparison for any company. Tremor justifies its IPO because it expects massive growth in its sector. Last year, companies spent $2.9 billion on digital video advertising, which Tremor predicts will increase to $8 billion by 2016.
That’s a lot of market to corner, and AllThingsD reports that competitors YuMe and Adapt.tv are also considering IPOs this year. Tremor will also have to compete with ad networks at Hulu and Youtube, which is owned by Google.
Should the IPO go off successfully and end with TRMR on the NYSE board, the big winners will be Cannan Partners, a venture capital firm that owns 19% of Tremor, along with 10% owners W Capital and Masthead Ventures. Tremor’s founders, Andrew Reis and Jesse Chenard, left the company in 2009; in 2010, the company acquired ScanScout and imported most of its management team, including current CEO Bill Day.