Do you know that feeling you get when you’re running and you lock into a nice, comfortable pace? That’s the zone that the venture-backed IPO market is in right now. All indications are that the just-right pace will continue (see story in News Analysis, page 11). Q3 was the strongest quarter in four years for VC-backed IPOs. The average company on the VCJ Aftermarket gained 20% from its IPO price to its close on Sept. 30. That was up from a gain of just 6% in August.
Six venture-backed companies joined the list in September, most of them posting strong aftermarket performances, and the hits kept coming in October. Three more venture-backed companies had gone public as of Oct. 15: Theravance Inc. (Nasdaq: THRX), IntraLase Corp. (Nasdaq: ILSE) and PlanetOut Inc. (NasdaqNM: LGBT).
* Theravance is a drug company based in South San Francisco. It priced at $19 per share on Oct. 5. While the stock closed down at $18.11 on its first day of trading, it’s important to note that the IPO price was $3 higher than the company originally planned. Founded in 1996, Theravance had raised in excess of $240 million from seven VCs, including Comdisco Ventures, JPMorgan Partners and New Enterprise Associates, according to the Money Tree Survey conducted by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.
* IntraLase is an Irvine, Calif.-based company that makes software for lasers used in eye surgery. The 7-year-old company priced at $13 a share on Oct. 7 and closed at $16.25 on its first day. It had raised more than $70 million from more than eight VCs, including Brentwood Venture Capital, Domain Associates, InterWest Partners and Versant Ventures.
* PlanetOut Inc. is a San Francisco company that operates gay and lesbian-themed websites. It went public on Oct. 14 at $9 per share, and its stock rose to $10.40 on its first day of trading. It had previously raised about $40 million in four rounds from more than nine venture firms, including Flatiron Partners, IDG ventures, JPMorgan and Mayfield.
If the market stays hot, look for more VC-backed companies to make it out. Among those in the queue on Oct. 15 were four dot-coms: Celebrate Express, an online party supply merchant; eLong, an online travel service; Shopping.com, an online shopping engine; and SmartPros, an online site that offers continuing education for professionals. More than 25 venture firms stand to cash in on those offerings, including Advanced Technology Ventures, JPMorgan, Menlo Ventures and Sprout Group.