After seven consecutive months of outpacing its performance from a year earlier, the venture-backed IPO market wasn’t looking too impressive in early September. As of Sept. 12, not a single VC-backed new issue had hit the market. For the full month of September 2006, six VC-backed companies went public.
Time to worry? Nope, says John Fitzgibbon Jr., founder of IPOScoop.com, it’s just a seasonal lull. In fact, he expects a “very active fall,” with 122 companies filing IPO registration papers between May 31 and Aug. 31. Collectively, those companies hope to raise $27.3 billion.
VCs apparently remain optimistic about the market, as evidenced by four privately funded companies registering to go public in the first two weeks of September:
• ArcSight, a developer of enterprise security management software that has raised about $15 million from Kleiner Perkins Caufield & Byers, Integral Capital Partners, Institutional Venture Partners, In-Q-Tel and Samsung Venture Investment Corp.
• Aprimo, a developer of marketing resource management software that has raised $47 million from Blue Chip Venture Co., First Analysis Corp., Frazier Healthcare and Technology Ventures, JEGI Capital, PricewaterhouseCoopers Venture Partners and Sigma Partners.
• BlueArc, a network storage systems provider that has raised $207 million from a long list of backers, including Apax Partners Worldwide, Dell Ventures, JPMorgan Capital, and Meritech Capital Partners.
Looking back at August, VC-backed IPOs had a strong month, with five companies raising a total of $439 million: DemandTec Inc., HireRight Inc., Masimo Corp., Sucampo Pharmaceuticals Inc. and Virtusa Corp. (see IPO profiles)
By comparison, just one venture-backed company went public in August 2006—InnerWorkings Inc., which raised $95 million.
The top Aftermarket performer for August was Masimo, which makes medical signal processing technologies. It priced at $17 per share and shot up 24% to $21 by Aug. 31. It went on to trade even higher, hitting $24.79 as of Sept. 12.
The weakest performer was DemandTec, which makes consumer demand management software. It priced at $11 per share, but it fell 13% to $9.59 by the end of August. As of Sept. 12, it had crept back up to $10.99.
For the first eight months of this year, 54 venture-backed companies have gone public, raising $7.2 billion. In the same period a year ago, 31 VC-backed companies raised $2.6 billion.
Another favorable stat: On average, this year’s VC-backed IPOs each raised $133 million as of the end of August, compared to an average of $86 million in the first eight months of last year. —Lawrence Aragon