NEW YORK – What a difference a year makes. Coming out of the third quarter of 2000, a total of 77 venture-backed initial public offerings had raised more than $7.1 billion. Fast-forward 12 months and venture capitalists are seeing a mere fraction of last year’s activity.
According to a data released early last month by Venture Economics and the National Venture Capital Association, just five venture-backed U.S.-based companies managed to execute public offerings during the third quarter, raising about $280 million, the lowest in recent memory.
While these figures are down dramatically from last year’s comparable period, the percentage of decline was only slightly higher than the IPO market as a whole, which saw 15 total offerings (U.S.- and foreign-based companies trading on U.S. exchanges) compared with 114 total offerings in the third quarter of last year.
Perhaps the most interesting characteristic of this past quarter’s offerings is that all but one of the U.S.-based deals came from the medical/health sector. Moreover, two of the first IPOs to hit the market in the fourth quarter also come from the sector and have significant venture backing.
First up, Israeli biotech firm Given Imaging Ltd. raised approximately $65 million from its five million-share offering on Oct. 4. The company was the first to price an IPO since Aug. 13, when Max Re Capital Ltd. sold 12 million shares at $16.00.
Prior to going public, Given Imaging raised just over $34 million from a group of investors that include OrbiMed Advisors, Discount Investment Corp., Elron Electronic Industries, PEC and Rafael Development Corp. Its most recent round was a $30 million series D transaction completed last fall.
The following week, Alameda, Calif.-based Therasense Inc. raised $114 million on Oct. 12, and saw its shares finish up 31%. The company sold six million shares at $19 per share, right in the middle of its expected $18 to $20 per share offering.
Prior to its IPO, the glucose monitoring equipment maker has raised over $115 million from such investors as Brentwood Venture Capital, Delphi Ventures, Lehman Brothers, InterWest Partners, MedVenture Associates and Sequoia Capital. Its most recent venture deal was a $56 million fourth round in January, which garnered TheraSense a $332 million post-money valuation.
Those medical/health companies that completed IPOs in the third quarter include: OmniCell Inc., a Palo Alto, Calif.-based provider of clinical infrastructure and workflow automations for the health-care industry; Alliance Imaging Inc., a provider of outsourced diagnostic imaging services based in Anaheim, Calif.; Natus Medical Inc., a San Carlos, Calif.-based developer of proprietary electronic medical instruments for prenatal care; and Wright Medical Group Inc., a developer of biologic orthopedic products, implants and instrumentations based in Arlington, Tenn.
The sole non-medical firm was PDF Solutions.