After a long pause, technology IPOs are back, and generating a level of attention from investors last seen on the eve of the millennium.
That’s the takeaway from the second quarter, when 25 venture-backed companies went public on U.S. exchanges, raising a total of $4.15 billion. Nine of those companies debuted in June, raising $1.07 billion.
For the most part, June technology offerings did well in first-day trading and held gains in the aftermarket. Top performers included storage recovery specialist Data Domain and optical networking company Infinera, both of which posted double-digit gains immediately following their IPOs and currently have market capitalizations of $1.4 billion and $1.9 billion, respectively.
Big green for Greylock
The Data Domain IPO was a huge success for the company’s venture backers, which put about $41 million into the company over three rounds. Greylock Partners was the biggest winner, with shares worth more than $312 million at the end of June. New Enterprise Associates and Sutter Hill Ventures also did well, with shares worth $297.7 million and 173.3 million, respectively.
While Infinera’s success was good for its new shareholders, very few of its VC backers were rewarded after sinking more than $336 million into the company over 14 rounds. Advanced Equities Capital and Kleiner Perkins Caufield & Byers were the largest VC shareholders in Infinera, each holding a 7.7% stake worth about $160 million following the IPO. Mobius Venture Capital and RWI Ventures held shares worth about $134 million and $86 million, respectively.
No dancing for Jazz
The climate for life sciences deals was less favorable, however, with just one company, Jazz Pharmaceuticals, able to carry out an IPO in June, after pricing shares below its projected range.
The new offering pace across all industries slowed down in July. As of the middle of the month, IP telephony service provider ShoreTel, was the only venture-backed company to debut on Nasdaq.
However, the July slowdown needn’t be taken as an omen of a sluggish third quarter, says John E. Fitzgibbon Jr., founder of IPOScoop.com, which tracks the new issues market. While Wall Street took a break for the Fourth of July, the pipeline of deals in registration remains strong enough to carry the momentum forward.
“It’s a far cry different from the 1999-2000 era,” Fitzgibbon says. “These are real companies with real revenues and quite a few of them have profits.” —Joanna Glasner