Circle's Unusual IPO: Insiders Cash Out, Is This The End Or Just The Beginning?

From Zero to IPO Hero (Maybe)

Well folks it seems Circle the company behind USDC is gearing up for an IPO. And not just any IPO but one where the insiders are more eager to sell than the company itself! I remember back in the day Microsoft was all about reinvesting reinvesting reinvesting. Maybe Circle's onto something new or maybe they just read my book 'Business @ the Speed of Thought' and took the 'speed' part a little too literally. It's rare like finding a bug free Windows version on day one to see investors selling more shares than the company during an IPO. Reminds me a bit of Facebook's early days but let's hope Circle's trajectory is more 'world domination' and less 'Cambridge Analytica'.

Show Me the Money (and Let Me Keep Some)

Apparently Circle made $64.8 million in net income last quarter and has almost $850 million in cash. So why are the bigwigs rushing to the exit? The article suggests venture capital firms are thirsty for liquidity after a few lean years. Understandable. Nobody wants to be stuck holding the bag when the music stops. As I always say "Success is a lousy teacher. It seduces smart people into thinking they can't lose." Maybe these VCs are just being smart or maybe they're just hedging their bets. Either way it's a bold move Cotton let's see if it pays off.

Allaire's Fair Share

Even Circle's CEO Jeremy Allaire is offloading about 8% of his stake. Not a bad chunk of change if you ask me. But hey I'm not one to judge. I mean I've sold a few shares in my time. It's all about diversifying right? Or maybe he just wants a new yacht. Who knows? Sean Neville and Jeremy Fox Green are also joining the selling party. It's like a fire sale but with more blockchain and less actual fire. The question is: are they jumping ship or are they just rearranging the deck chairs on the Titanic? I do have trust in the leadership of Circle so I'm hopeful for their future.

VCs in a Bind

Accel Breyer Capital General Catalyst IDG Capital and Oak Investment Partners are all cashing out about 10% of their holdings. Look VC firms have a fiduciary duty to their investors to find exits so I get it. In any case I believe that the remaining holding of the investors shows that they're still expressing belief in the company. As Lise Buyer rightly said "The big guys are holding enough so they still have skin in the game so that shouldn't alarm investors,"

The Float Factor

The article points out that without these insider sales Circle would only be offering a tiny percentage of its shares to the public. That's like trying to launch a new operating system with only one megabyte of RAM. You need enough float to have a functioning market. It's basic economics people! Sometimes you have to grease the wheels to get the engine running. And in this case 'grease' apparently means letting the early investors cash in their chips. But let's just hope it isn't the only motive.

Exit Stage Right (or Left?)

So what does it all mean? Is Circle's IPO a sign of things to come? Are we entering a new era where insider sales are the norm? Only time will tell. But one thing's for sure: the tech world is never boring. And as I always say "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten." So buckle up folks because the ride is just getting started. Now if you'll excuse me I have a foundation to run and a world to save. And maybe just maybe I'll buy a few shares of Circle myself. After all I do love a good gamble.