Following on the heels of a new $25 million private funding round discovered last week, Roku now appears to be gearing up secretively for a much larger initial public offering.
According to reports by The Wall Street Journal and The New York Times, Roku Inc. is preparing to file confidentially for an IPO that could raise as much as $150 million. On top of the money the company has already raised privately, that would double Roku's funding total to roughly $300 million. The Wall Street Journal wrote that Roku has been working with several investment banks on IPO preparations, including Bank of America, Merrill Lynch & Co. Inc. and Citigroup . (See Playing Catchup With CES and Roku Raises $25M, But for What?)
Roku hasn't shared many details on why it's building up its cash reserves, but the company is exploring several new business models that could benefit from the additional funding as it competes against a growing line-up of major rivals in the media streaming market. In the retail channel, Roku has worked with hardware manufacturers, such as Hisense Optoelectronics Technology Co. Ltd. and TCL, to introduce Roku-powered TV sets.
In the service provider market, Roku recently announced it has launched a white-label program bundling its hardware and software in a package set for cable and telco TV operators. Sky , already a major Roku investor, has been using Roku media players for its Now TV streaming video catchup service since the end of 2012. (See Roku Pursues Pay-TV Providers.)
New money for Roku might also suggest that the company has plans to pursue more content for its streaming media platform. While good content is expensive upfront, it can also be lucrative on the back end, thanks to revenue-sharing agreements.
— Mari Silbey, special to Light Reading