Covid Online Boom Spawns Top U.S. IPO Since Beyond Meat, Lifts China VCs

Grocery chain Albertsons might have been the best-known IPO in the U.S. this week among American investors, but the top performance went to a Shanghai-based technology company.

Shares in video and voice communication platform supplier Agora soared by 153% from their IPO price of $20, closing at $50.50 on their Nasdaq

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debut. Its one-day gain was the best among IPOs since the 2019 listing of Beyond Meat, according to Renaissance Capital.

Investors bid up shares on hopes for increasing demand for its real-time voice and video communication network service, which developers can use in an app without having to create the technology from scratch. In the first quarter of 2020, the company reversed a 2019 year-earlier loss of $6.3 million, turning a profit of $3 million on revenue of $36 million.  About 75% of Agora’s revenue of $63 million in 2019 came from China (it couldn’t provide a China breakdown for the first quarter of this year).

As with many online business, Agora says business was actually helped by the Covid-19-related lockdowns. “While the long-term impact of the Covid-19 outbreak is uncertain, during the first quarter of 2020 we experienced significant usage and revenue growth, as people spent more time learning, gaming and otherwise interacting online due to work, school, travel and other restrictions,” the company’s prospectus says. Longer term, Agora believes the Covid-19 pandemic will accelerate end users’ shift towards real-time applications.

Agora was founded in 2013 by CEO Tony Zhao, who previously was a CTO and director at China’s Nasdaq online streaming site YY (recently named JOYY). Zhao, 49, earlier worked at WebEx Communication and holds a bachelor’s degree in radio and electronics from Peking University.  Zhao’s stake in Agora was worth $962 million — just short of $1 billion – at Friday’s closing price.  The company raised $350 million in its IPO.

Agora’s IPO gain also rewarded some of China’s best-known venture capitalists. Richard Liu, who ranked No. 6 on the 2020 Forbes Midas List, is an Agora board member and managing director at Morningside Venture Capital; Morningside-related entities own a 12.1% stake in Agora. Tuck Lye Koh, who ranked No. 42 on the 2020 Forbes Midas List, is an Agora board member and CEO of Shunwei Capital, whose funds owns 7.8% of Agora.  And funds managed by Jenny Lee’s GGV Capital hold a 1.8% stake; Lee ranked No. 35 on the 2020 Forbes Midas List. Funds from Philippe Lafont’s Coatue Management Partners and Arthur Dantchik’s Susquehanna International Group also have stakes, as does JOYY.

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@rflannerychina