05 Jan WSJ | Palantir and Investors Spar Over How to Cash In
Data-mining company has no interest in IPO, but employees and co-founders are trying to sell shares
Palantir Technologies Inc. is one of the world’s most valuable private companies but has no interest in going public. Some of its earliest investors, employees and even Palantir co-founders are trying to cash in anyway.
Their moves reflect a deepening rift in Silicon Valley between private companies that want to stay that way and investors who want to unlock at least some of the profits from their most successful investments.
Investment firms launched by Peter Thiel, a Palantir co-founder and chairman, are seeking to sell more than $100 million of their shares in the Palo Alto, Calif., data-mining company, say stockbrokers and venture capitalists.
Another co-founder, Joe Lonsdale, has urged Mr. Thiel to create a large “special-purpose vehicle” to help facilitate employee and investor stock sales.
And some former and current Palantir employees have tried to bundle their tiny stakes in the company into blocks that likely would be easier to sell in the opaque, ad hoc market for shares of closely held technology companies.
Some investors in Palantir and other private companies are worried their money could wind up marooned in firms with no exit strategy. Some firms have grown more leery about going public because of the chilly market for tech-related initial public offeringsand concerns about sky-high valuations.
Many of the fastest-growing tech firms already were reluctant about doing an IPObecause venture capital has been abundant and private companies are bound by less regulatory red tape than those that go public.
Palantir was valued at $20 billion in a funding round earlier this year, trailing only Uber Technologies Inc., Xiaomi Corp. and Airbnb Inc. among venture-backed private companies. Palantir has raised money from investors at least 12 times for a total of $1.9 billion since its start in 2004, according to Dow Jones VentureSource.
The company is best known for its software that lets government agencies such as the Central Intelligence Agency and Federal Bureau of Investigation quickly visualize relationships among large amounts of data.
Palantir’s technology crunches bank records, phone numbers, friend lists, license-plate photos and other records. Palantir recently has pushed deeper into the private sector, where the company’s customers include banks, oil and gas companies, and chocolate maker Hershey Co.
Palantir has said privately that its bookings, which measure the size of customer contracts, grew to roughly $1.1 billion in 2014 from about $30 million in 2009, an annual growth rate of 107%.
Despite the surge, though, Palantir repeatedly has said that it has no plans for an initial public offering.
“I’m committed to Palantir for the long term, and I’ve advised the company to remain private for as long as it can,” said Mr. Thiel, a billionaire who also helped start PayPal. Palantir’s chief executive, Alex Karp, wouldn’t comment.
Messrs. Thiel and Karp were classmates at Stanford University who formed Palantir after envisioning a data-driven strategy to tackle security risks in the wake of the Sept. 11, 2001, terrorist attacks.
Palantir is unusual among tech companies for having long tried to relieve some of the pressure from investors by helping them sell limited quantities of stock. An executive at Palantir even acts as a broker of the company’s shares.