Sprout Social, a social media management SaaS company with over $100 million ARR (annual recurring revenue), has filed to go public. According to Crunchbase, the startup raised about $111 million and was most recently valued at around $800 million. Like so many other fast-growing tech companies, Sprout Social has significant double-digit yearly growth but also operating at a loss.
Any company, no matter how seemingly invincible, has a weakness factor. And for Sprout Social, it’s clearly the fact that its business model is 100% dependent on access to a small handful of privately owned social media networks. Facebook, Twitter, and the like can and do change the terms of their APIs over time. There’s been a history of companies being greatly undermined following some sort of new API restriction, often with little or no advance warning.