The first quarter of 2010 was generally positive for the venture capital industry. Techcrunch recently reported that although funding was down from the fourth quarter of 2009, the amount still doubled the first quarter of 2009. And liquidity is beginning to appear for venture-backed companies; the IPO window has opened, although it may only be slightly ajar. 8 venture-backed companies went public over the past three months, and many more are currently seeking to go public. Whether the IPO window will stay open is anyone’s guess.
Professor Jay Ritter from the University of Florida, a renowned expert on IPOs, had the following to say in recent correspondence with InSITE: “The IPO market has rebounded to modest levels of activity, but deal volume ever since the tech stock bubble collapsed in 2000 remains low compared with an average year in the 1980s and 1990s. What is particularly noteworthy is the paucity of offerings by small and young companies, in marked contrast to the 1980s and 1990s.”
Professor Ritter’s website provides extensive and timely information about the IPO market, which can help shed light on his reserved comment. For instance, only 9 and 12 venture-backed companies went public in 2008 and 2009, respectively, whereas over 500 went public in 1999-2000. So while the IPO window clearly isn’t wide open, it seems that more than just a few anomalous companies will have the opportunity to go public in 2010.
Further links:
- Professor Ritter’s IPO website
- Historical charts and data covering venture-backed IPOs
– Ryan Golden