Eric Lefkofsky knows the public rodeo well and intends to compete in it for the fourth time. A serial entrepreneur whose fortune is estimated at approx almost $4 billionhe has already taken over three public firms he founded.
Today, he is the founder of Tempus, a genome testing and data analytics company preparing for an IPO. But he is best often known as the co-founder of each day deal pioneer Groupon, which went public at a valuation almost $13 billion in 2011in one of the most famous debuts of this 12 months.
Groupon’s IPO and the years after the IPO were infamously fearful, although the public listings of his other two firms – InnerWorkings in 2006 and Echo Global Logistics in 2009 – attracted little investor interest and performed well for Lefkofsky. InnerWorkings, the supply chain startup he founded in 2001, has been sold to the company private equity in 2021 for a fraction of the IPO market capitalization.
Meanwhile, shares of Echo Global Logistics steadily appreciated in value over its 11-year history in public life before it was also sold to personal equity funds after 50% of the premium in comparison with the last price quoted in 2021.
Some of the controversy with Groupon involved the report that Lefkofsky made greater than $300 million in Groupon’s pre-IPO round, leaving the company with little working capital and reducing its reported revenue by about half in amended S-1 filings after regulators examined the financial data in its initial S-1. This unconventional decision also dropped at light another case from his past. In 2000, he sold his dotcom-era company Starbelly.com to a 50-year-old company; a 12 months later, the company declared bankruptcy, in accordance with some reports.
All this has given Lefkofsky a fame for having something of a golden touch, at least so far as he is concerned, but perhaps not so far as the long-term investors of his firms are concerned.
With Tempus, Lefkofsky is making another try and create a sustainable and priceless company. It was reportedly his wife’s successful treatment for breast cancer that led him to found Tempus in 2015.
“I was perplexed by how little data was part of her care,” he said Forbes last 12 months. “It made me believe that there is a whole world of technology that has been created for other industries that can be applied to cancer treatment and help doctors make data-driven decisions.”
He stepped down as Groupon’s CEO in 2015 as the company’s value fell to $2.6 billion. (Groupon’s market capitalization today is roughly $600 million). At that point, Lefkofsky focused his attention on the early-stage company Lightbank.
Interestingly enough, Tempus S-1 filing he claims that he has not received any salary for the last two years (S-1 didn’t provide any indicated officer with remuneration higher than two years). However, the proposal also indicated that he was to receive $800,000 and an $800,000 bonus starting in 2025. And although he didn’t receive a salary, he was paid a $5.3 million dividend on company stock this 12 months, in accordance with the prospectus. The filing also shows that Tempus also paid the cost of $7.5 million in preferred stock issued to it and $200,000 to cover private aircraft expenses.
Tempus’ 2023 revenue was $531 million, up 66% from $321 million in 2022. However, the company continues to face heavy financial losses, with net losses of $265 million (in 2023). and $196 million (in 2022). While the silver lining in the company’s financials is that its operating loss margin dropped from 83% in 2022 to 37% in 2023, in accordance with the S-1 filing.
Additionally, Tempus has a contract with Pathos AI, another company founded by Lefkofsky. Pathos AI is a drug discovery platform founded in 2020. Pathos pays Tempus for the right to license its data. Meanwhile, Tempus COO Ryan Fukushima serves as CEO of Pathos and splits his time between the two firms.
There are other indications that Lefkofsky wields more power at Tempus than is customary.
Although Tempus has not yet accomplished the list of its principal shareholders, revealing only that Lefkofsky is among them and holds at least 5% of the company’s shares, the billionaire clearly desires to retain full control of the company after it goes public. Tempus awarded its shares as many as 30 votes per share. Super voting stocks are not unusual, but 10 votes per share is more common and 20 votes is considered high. So this is unusually high shareholder influence for a CEO of a health care company, and we’ll have to see if it’s reduced in future S-1s, meaning whether potential investors oppose it.
However, Tempus’ S-1 cannot exaggerate how vital Lefkofsky is to the company’s future. A healthcare VC investing in genomics and data analytics firms told TechCrunch that Tempus wouldn’t have grown as large or raised as much capital without Lefkofsky’s marketing and fundraising skills.
Tempus raised $1.42 billion in financing from investors including its Lightbank company, in addition to NEA, Revolution Growth, T. Rowe Price, Novo Holdings, Franklin Templeton and Baillie Gifford. The company was last valued at $8.1 billion in October 2022. Tempus’ S-1 filing also revealed that it recently received $200 million from SoftBank.
Regardless of how much capital Tempus raises in the IPO, the company’s prospectus makes it clear that it is still far from break-even and might want to “raise additional capital in the future.” While most unprofitable firms typically include this detail in their prospectuses, investors will likely expect Tempus to pursue another public offering at some point, which could impact their share price.
Tempus is also struggling to position itself as an artificial intelligence company, despite the fact that AI revenue accounted for just $5.5 million in revenue, or about 1% of total revenue in 2023.
“I see that Tempus is betting on growth and the timing is right to introduce artificial intelligence in life sciences, but I don’t think the company has proven that yet with its current offering,” said the healthcare investor.
In its S-1 filing, the company said that while its “AI product line is in its infancy, it plans to incorporate artificial intelligence, including generative artificial intelligence, into every aspect of its diagnostic tools.” Tempus declined to comment beyond what is listed in the S-1.