New Issues Post Modest Gains, VCs Fill the Pipeline –

Of the 12 venture-backed companies that went public between September 2002 and August 2003, 11 (or 92%) were trading at or above their IPO prices as of the end of August. Unfortunately, the two new members of the Aftermarket list – Direct General Corp. and Providence Service Corp. – weren’t as strong out of the gates as their peers. They posted an average gain of 17%, well below the 81% gain posted by the rest of the group (excluding Cosi, which is at the very bottom with a negative return). That caused the gain of the overall group to fall for the first time since March (see chart, right).

Even with the relatively disappointing performance of Direct General and Providence, VCs believe the market has an appetite for more venture-backed issues. Among the startups that recently filed to go public are Open Solutions, backed by Menlo Ventures and Axiom Venture Partners; Myogen, with backing from New Enterprise Associates (NEA), InterWest and JPMorgan Partners; and NEA-backed Xcel Pharmaceuticals and Pharmion Corp.