Eric Lefkofsky knows the public list rodeo well and is about to enter for the fourth time. The serial entrepreneur, whose net worth is estimated at nearly $4 billionhe has already taken three companies he founded public.
Today he is the founder of Tempus, a genomic testing and data analytics company preparing for IPO. But he’s best known as the co-founder of daily deals pioneer Groupon, which went public at a valuation nearly $13 billion in 2011in one of the most popular debuts of that year.
Groupon’s IPO and post-IPO years were ingloriously troubled, though the public listings of his other two companies — InnerWorkings in 2006 and Echo Global Logistics in 2009 — didn’t raise major flags for investors and did well for Lefkofsky. InnerWorkings, a supply chain startup he founded in 2001, sold to of private equity in 2021 for a fraction of the IPO capitalization.
Meanwhile, Echo Global Logistics’ stock appreciated steadily during its 11-year public history before also being sold to private equity in 50% premium relative to the last traded price in 2021.
Some of the controversies with Groupon included a report that Lefkofsky took more than $300 million from Groupon’s pre-IPO round, leaving little working capital for the company and cutting its reported revenue by about half in revised S-filings 1, after regulators reviewed the financials in its original S-1. This unorthodox decision also brought to light another deal from his past. In 2000 he sold his dot-com-era company Starbelly.com to a 50-year-old company. a year later, this company filed for bankruptcy, according to some reports.
All of this has given Lefkowski a reputation for having something of a golden touch, at least for himself, but perhaps not for his companies’ long-term investors.
With Tempus, Lefkofsky takes another shot at building a long-lasting, valuable company. It was reportedly his wife’s successful treatment for breast cancer that led him to found Tempus in 2015.
“I was baffled by how little data was part of her care,” he said Forbes last year. “I was drawn to this idea that there was all this technology that had been created for other industries that could be applied to cancer care and help doctors make data-driven decisions.”
He stepped down as CEO of Groupon in 2015, when the company’s value had fallen to $2.6 billion. (Groupon’s market cap today is about $600 million.) At the time, Lefkofsky turned his attention to an early-stage venture firm, Lightbank.
Tempus is interesting S-1 filing he says he has not received any salary for the past two years (S-1 did not provide more than two years’ worth of executive compensation to any named officer). But the filing also said he’s due $800,000 and an $800,000 bonus starting in 2025. And, even though he didn’t draw a salary, he was paid a $5.3 million dividend from company stock this year, the prospectus shows. The filing also showed that Tempus has also covered the cost of $7.5 million worth of preferred stock issued to him and paid $200,000 for his private jet.
Tempus’ revenue was $531 million in 2023, up 66% from $321 million in 2022. However, the company is still bleeding a lot of cash, with net losses of $290 million (in 2023) and $214 million (in 2022). Although the bottom line in its financials is that its operating loss margin has shrunk from 83% in 2022 to 37% in 2023, according to the S-1 filing.
In addition, Tempus has an agreement 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 Pathos’ CEO and splits his time between the two companies.
There are other indications that Lefkofsky wields more power over Tempus than usual.
While Tempus has yet to fill out a chart of its major shareholders, revealing only that Lefkofsky is among them and owns at least 5% of the company, the billionaire clearly wants to retain full control of the company after going public. Tempus granted its shares 30 votes per share. Overvoting shares are not uncommon, but 10 votes per share is more common, with 20 votes considered high. So that’s an unusually high amount of shareholder influence for a CEO of a healthcare company, and we’ll have to see if it diminishes in future S-1s, indicating whether potential investors have balked at it.
However, Tempus’ S-1 may not be overstating how important Lefkofsky is to the company’s future. A healthcare VC that invests in genomics and data analytics companies told TechCrunch that Tempus would not have grown to its size, or raised as much capital, without Lefkofsky’s marketing and fundraising skills.
Tempus has raised $1.42 billion in funding from investors including his company Lightbank, as well as 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 its IPO, the company’s prospectus made clear that it is still far from breakeven and will need to “raise additional capital in the future.” While most not-for-profit companies generally include this detail in their prospectuses, it’s possible that investors will expect Tempus to have a follow-on public offering at some point, which could weigh on its share price.
Tempus is also trying to position itself as an AI company, even though AI revenue accounted for only $5.5 million in revenue, about 1% of total revenue in 2023.
“I see Tempus betting on their growth and the mature timeline for AI across the life sciences, but I don’t think the company has proven that yet with their current offering,” the healthcare investor said.
The company said in its S-1 filing that while its “AI product line is nascent, it plans to integrate AI, including genetic AI, into every aspect of its diagnostic tools.” Tempus declined to comment beyond what is stated in the S-1.
