Venture capitalists finally landed a big one-Dick’s Sporting Goods (NYSE: DKS)-after trolling the IPO waters without success for nearly three months. But despite the good catch, VCs should be prepared for empty nets for a good while longer. Dick’s, a Pittsburgh-based sporting goods retailer, priced 7.3 million shares at $12.25 each on Oct. 15, raising $89 million. About a week later, the stock shot up to $14.95 on Oct. 18.
Vulcan Ventures (Paul Allen’s firm) was the biggest venture winner: It sold 841,000 shares in the offering, pocketing $10.3 million, and it still holds 1.2 million shares worth about 18 million.
Bessemer Venture Partners was the second-largest winner, selling 747,000 shares for $9.1 million. It hung on to just 76,000 shares after the offering. Next came Oak Investment Partners, which made $2.6 million and still owns 491,000 shares worth $7.3 million. Finally, Crosslink Capital sold about 90,000 shares during the offering for $1.1 million and hung on to 406,000 shares worth about $6 million.
(Credit Suisse First Boston, which holds 241,000 for The Sprout Group, sold 110,000 shares during the offering for $1.3 million. It still holds another 388,000 shares.)
Prior to Dick’s Sporting Goods offering, HealtheTech was the last venture-backed company to go public. It sold 4 million shares at $7.50 a pop in July. The Golden, Colo.-based health monitoring device maker had raised $70 million from a list of venture capitalists that includes Berringea, New England Partners, Palm Ventures and Proctor & Gamble Co. The drought from the start of July to mid-October marks the lowest combined venture-backed IPO tally since the second quarter of 1978.
Despite Dick’s good fortune, the public market isn’t out of its slump. “Were seeing some things trickle out, but it’s certainly not the reopening of the market,” says one Wall Street analyst. “I am not surprised that [Dick’s] got done. Some things happen because people trade favors for favors. Who you know counts.”
Founded in 1948 as a bait-and-tackle shop in upstate New York, now Dick’s Sporting Goods operates a chain of 132 stores in 24 states along the East Coast as well as an online retail operation. The company first tapped the private equity markets in 1992, when Bessemer, Oak and Sprout pumped $7 million into the company to finance its expansion. Vulcan joined Dick’s group of original investors in a $34.3 million Series C round of venture financing that also fueled the company’s retail expansion.
In 1999, when Oak and Online Retail Partners invested $20 million in the company, Dick’s Sporting Goods emerged as an online contender in the world of sports retailing with dsports.com. It went head to head with Redwood City, Calif.-based Fogdog Inc., a company also backed by Sprout Group. Fogdog priced its IPO is December 1999, raising $66 million in the public markets. Fogdog’s stock was delisted a year later.
Dick’s Sporting Goods has not abandoned its Web strategy, but it will not make further investment into the endeavor.