Just two venture-backed companies went public in May, raising $283 million. In the same period a year earlier, seven venture-backed companies went public and raised a total of $471 million. Worse, only five VCs held large enough stakes to be listed as principal shareholders of the new issues in May, compared to 29 in May 2004. And of the 29 VCs cashing in a year ago, three had stakes in two or more of the May 2004 IPOs: Kleiner Perkins Caufield & Byers (Nuvasive and Blue Nile); Oxford Bioscience Partners (Acadia Pharmaceuticals and Critical Therapeutics); and J&J Development Corp. (Animas, Critical Therapeutics and Nuvasive).
For the first five months of this year, 14 venture-backed companies have gone public, down from 27 in the first five months of 2004. It’s worth noting that the average share price of this year’s new issues was $11.50 and they were trading lower on May 31, with an average closing price of $10.65. For the first five months of last year, the average VC-backed IPO priced at $11.96 and closed at $13.68 on May 31, 2004.
On the bright side, the aftermarket has finally picked up, with an average increase of 30% in May, up from a 20% gain in April. We haven’t seen a month-over-month increase of that size since October of last year. We can only hope that it’s a sign that Wall Street is getting more receptive to new venture-backed issues.