What Splunk’s 2012 IPO Plans Say About The Venture Mindset

Splunk Inc.’s message is pretty clear: things are good, so the time is right to think about an IPO.

The startup, which helps corporations monitor their IT infrastructures, said this week its 2010 revenue rose 96% to $66 million.

As a result, a 2012 IPO is a possibility, if the markets hold up, says Nick Sturiale, a general partner at Jafco Ventures. Sturiale (pictured) funded the company when he was at Sevin Rosen Funds and sits on its board.

Splunk is an example of a maturing startup with good growth prospects and a clever business plan. It helps enterprise customers collect, index and make sense of data generated by their servers, applications and other infrastructure devices. The goal is to improve performance and enhance security. The company added 900 new customers in the past year and now has 2,300 in 74 countries.

It is exactly the type of startup that would have gone public during the more prosperous times of the late 1980s and mid 1990s. So does its interest in an IPO suggest a new willingness to test the public markets? Are entrepreneurs and investors more convinced a window is opening?

This week, Rory O’Driscoll, a managing director at Scale Venture Partners, offered an opinion on this topic in a thoughtful column published by WSJ’s Venture Capital Dispatch. In it, he suggests the exit environment (M&A and IPO) is better than the posted numbers suggest. (He declined to provide details.) But even the available numbers show a reasonable outcome, he pointed out, with exits returning $26.5 billion to the industry last year, well ahead of money raised from LPs.

If he and Splunk are guides, there appears to be a changing mindset among GPs. Splunk will continue at present to focus on innovation and grow its customer base, said Sturiale.

When he thinks about 2012 and the prospect of a public offering, he adds that the company has “a very interesting business model.” Yes, and perhaps an attractive market place in which to file an S-1.