First the bad news: Just 23 U.S.-based venture-backed companies were able to go public last year, down from 35 in 2001.
Now for more bad news: Twelve of the 23 new issues were trading below their initial public offering prices as of the close of market on Jan 6. Just three of the companies showed price increases in excess of 50% from their offering dates to Jan 6: Dick’s Sporting Goods (up 75%), IT services company SRA International (up 63%) and online payment service PayPal (up 56%).
OK. It’s not all bad news. Four venture-backed companies squeezed out the door in the fourth quarter, and three out of the four were trading above their IPO prices at the close of the year: Dick’s, hospice provider VistaCare and health care software developer Impac. The fourth company, Cosi, which operates sandwich shops, was down 25% to $5.22 on Jan. 6 from $7 on its IPO date of Nov. 22.
Even though it’s the top gainer, Dick’s may give some venture capitalists pause about investing in companies not traditionally backed by VCs. The company, based in Pittsburgh, took in its first venture backing 10 years ago and hauled in about $84 million before it went public. Its offering size was just $87.5 million and its market cap totaled just $149 million on the close of its first day of trading. Thankfully, the stock has shot up since then-even more in mid-January-boosting the value of the stakes held by Dick’s backers.
Fourcar BV probably wishes it had not sold so many shares in the IPO. It sold 1.7 million shares for $12 apiece, or $20.4 million. If it had hung onto those shares, they would have been worth $36.8 million on Jan. 17 (when they closed at $21.65). Paul Allen’s Vulcan Ventures gambled and held onto most of its shares. It made $10 million through the sale of 841,000 in the IPO, but its remaing shares (1.2 million) were valued at $26 million on Jan. 17.