IPO Aftermarket: Life sciences keep dominating as Pure Storage files its IPO

Venture-backed companies in healthcare and life sciences continue to dominate the IPO market, even as observers anticipate some well-known tech companies to go out in the next few weeks or months.

Year-to-date through the end of July, 38 of the 50 VC-backed offerings, or 76 percent, have been in life sciences or healthcare-related fields, such as telemedicine.

That’s a trend that continued in July as the market saw eight new venture-backed companies launch public offerings. Only two of them were tech companies in the month: the Internet telecommunications company Ooma and the cyber security services provider Rapid7.

However, the largest new VC-backed issue in July belonged to San Carlos, Calif.-based Natera, a medical diagnostics company, which raised $180 million in proceeds in its debut.

The company also raised more than $180 million in funding from Sofinnova Ventures, Claremont Creek Ventures, Sequoia Capital, Lightspeed Management Company, OrbiMed Advisors and The Founders Fund, among others.

Through the end of July, the 50 VC-backed companies that have gone public on the NYSE or Nasdaq exchanges have collectively raised more than $5.4 billion in proceeds, according to a VCJ analysis of year-to-date IPOs.

However, stock market watchers are looking at a couple of tech companies and their possible IPOs in the immediate future.

In late July, Square, the mobile-payments company founded in 2009 by Jack Dorsey, who also is the interim CEO of Twitter, filed confidentially for an initial public offering, according to media reports.

Square has raised more than $590 million in funding and has a market valuation of $6 billion, according to The Wall Street Journal.

Dorsey, the company’s CEO, owns 26.2 percent of Square, making him the mobile payments company’s largest shareholder. The next biggest is Khosla Ventures with 17.4 percent. Others with big stakes in Square include Jim McKelvey, co-founder and a director, with 9.4 percent.

Under the U.S.JOBS Act, companies with less than $1 billion in revenue can file confidentially for an IPO with the Securities and Exchange Commission while they test investor appetite and keep financial and operating details outside of public scrutiny. However, a confidential filing does not necessarily lead to an IPO, so it is uncertain if Square will go public and at what price.

More certain, although not guaranteed of a public debut soon, is Pure Storage, a Mountain View, Calif.-based provider of flash storage devices.

Pure has raised more than $520 million in capital and is valued at $3 billion, according to Thomson Reuters data. Investors include Index Ventures, Sutter Hill Ventures, Greylock Partners, Redpoint Ventures, T. Rowe Price, Tiger Global and Wellington Management.

The company, which filed IPO registration papers in mid-August, indicated its initial target is to raise $300 million in proceeds. The final size of the IPO could be different.

On the launching pad, other VC-backed companies in registration include:

• Gensight Biologics SA, a French biopharmaceutical company focused on developing treatments of retinal degenerative diseases. The company has raised about $82 million in funding from Index, Abingworth Management and others.
• Aeglea Biotherapeutics, an Austin, Texas-based biopharmaceutical company, and which has raised $54 million in funding from Lilly Ventures, OrbiMed Advisors, Venrock and others.
• Cerecor, a Baltimore-based developer of treatments for patients suffering from nervous system disorders, and which has raised more than $16 million from Apple Tree Partners, MPM Capital and New Enterprise Associates.