Five-year-old teeth-straightening company SmileDirectClub went into its first day of trading on Thursday with high hopes and a near-$8.9 billion valuation.
The company on Wednesday priced its initial public offering at $23 a share, but started trading below that. The stock closed down 28% on Thursday at $16.67 a share. SmileDirectClub ended its first day of trading with a $6.4 billion valuation.
SmileDirectClub is a startup that provides clear aligners for teeth. While it typically costs anywhere from $3,000 to $7,000 to get traditional braces or Invisalign-brand aligners, SmileDirectClub goes for a fraction of that — you can either pay $1,895 up front or a total of $2,290 spread out over two years.
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The idea behind SmileDirectClub is to make straightening teeth more affordable by cutting out the steps of going in person to a dentist or orthodontist to get braces or other alignments. The company was started by Alex Fenkell and Jordan Katzman in 2014.
In October, SmileDirectClub raised $380 million from the private-equity firm Clayton, Dubilier & Rice and the venture firms Kleiner Perkins and Spark Capital. The round valued the company at $3.2 billion, up from $275 million just two years earlier.
In its filing, SmileDirectClub listed the top shareholders in the company and their stakes. These are SmileDirectClub's top investors:
- David Katzman, 59, is the chairman and CEO of SmileDirectClub. Katzman is the largest shareholder in SmileDirectClub, and the filing said that at the completion of the offering, he would control a majority of the voting shares of the company. Katzman is the founder and managing partner of the Detroit-area-based Camelot Venture Group, which has invested in Quicken Loans, Sharper Image, and 1-800 Contacts. Katzman is the father of cofounder Jordan Katzman. After the IPO, he would own nearly 88 million shares, valued at about $1.4 billion, based on the closing share price of $16.67.
- Jordan Katzman, 29, is a cofounder of SmileDirectClub and a director on its board. After an IPO, Jordan Katzman would own about 69.6 million shares, valued at about $1.2 billion.
- Alex Fenkell, 30, is a cofounder of SmileDirectClub and a director on its board. (He and Jordan Katzman met at summer camp.) Post-IPO, Fenkell would own 63 million shares, valued altogether at up to $1.0 billion.
- Steven Katzman, 56, is SmileDirectClub's chief operating officer and a member of the board. Steven Katzman is an adviser to Camelot and David Katzman's brother. He would own up to 6.3 million shares, valued at up to $104 million. That figure excludes the roughly 28 million shares (valued at up to about $473 million) that he is a beneficial owner of by way of the "David B. Katzman 2009 Family Trust," for which Steven Katzman is a trustee, according to the recent financial filing.
- Kyle Wailes, 35, is SmileDirectClub's chief financial officer. He joined the company in May 2018 after working at Intermedix, a billing-technology company. Wailes would own about 259,000 shares after an IPO, valued at up to $4.3 million.
- Susan Greenspon Rammelt, 54, is SmileDirectClub's general counsel secretary and a member of the board. Greenspon Rammelt also serves as Camelot's general counsel. After an IPO, she would own up to 273,000 shares, valued at up to $4.6 million.