How Scott Coyle Is Opening Up The IPO Process To Retail Investors

Benzinga's Fintech Focus Podcast features conversations with the biggest names in fintech. Subscribe to the Fintech Focus newsletter to get a roundup of industry news delivered to your inbox weekly, and check out upcoming programming at Benzinga events.
  
In this episode of the Fintech Focus podcast, we dive into the world of IPOs and put you into the shoes of an average investor who’s looking to be more involved in the investing process of, say, something like Lyft, which is gearing up for its stock market debut this year.
 
IPOs are already intriguing enough in their own right, but not everyone has access to the IPO process itself. If you’re a large investor, good for you—you’re probably getting shares at the original price. But if you’re someone who doesn’t have millions of dollars and still wants to get in on an exciting tech company, like Lyft, the best you can hope for is to wait until some profits come rolling in.
 
That’s why Scott Coyle, a veteran who survived the 1980’s stock market roller coaster, created ClickIPO, an app that acts as the middleman between retail investors and IPO underwriters. ClickIPO lets would-be investors put their mark down on an IPO before it opens, which then turns into proof that there’s retail demand out there.
 
Listen to the podcast below to hear about how Coyle and his app are helping to give interested parties apart from large investors some skin in the IPO game.

Interview Highlights

What was the big push to get ClickIPO off the ground? What were you seeing in the investor world that you wanted to change?
So, the whole IPO market kinda gravitated from the NASDAQ crash to where it is today, where it became primarily institutional- driven and super high net worth at the major firms. And so the individual investor, the person making $75,000 a year or $100,000 a year, that whole market went to the online brokerage firms, and so the online brokerage firms have exploded with individual investors, but yet these investors don't have access to the capital markets. But its needed issuers need broad exposure to their offerings when they go public.

So, we had started talking about this business model probably 10 years ago, but we finally decided, hey, let's put together a business model where we could democratize the IPO market so more of the public, more everyday investors could get access to initial public offerings and secondary offerings.

What kind of IPOs are we talking? Is there a select few that you work with? Or is it any IPO?
Well, we have agreements with 31 or 32 underwriters out of New York and some in Southern California as well. But basically, there's probably 40 or 50 underwriters total that actually process IPOs. So, we have an agreement with 31, so what that means is, just when we have an agreement with somebody, that means when they have an offering coming public, they can allocate shares to us.

So, what happens is something is going to go public, it goes into registration with the SEC. We list it on our platform. And when the price range is set for these offerings, which is typically a couple of weeks after it's listed on our platform, once a price range is set for an IPO you can start taking orders. So, when they set that price range, we'll talk to an underwriter that we have an agreement with and say, "Hey, will we participate in this offering?" And if they say yes, then we make it available to order on our platform. And then customers that are using our platform can, they can place orders on the platform.

What is your general sense right now of the market's appetite for IPOs?
Well, last year was a pretty good year until we got into the November, super November timeframe when the market started to correct severely and that kind of shut off the market for a while. When the market goes down drastically there's not a lot of new capital for IPOs. So, although the year was pretty good, many companies that became public took a hit at the end of last year, just like the broader market did.

So many of these companies have elected not to go public as soon as they have in their product life cycles like they would have 15 years ago. But there is a giant backlog of public companies, some of which are eventually going to need exits. And those are either going to go through the MNA process, but some of these companies might be too big have an MNA, so they're going to go public eventually. We see the broader public market picking up the next two or three years. We see it getting better over time as our opinion.