Twitter and A123
There’s no arguing that the recent IPO of A123 and the huge raise by Twitter are good news for market starved for good news. At least someone had a great exit, if you can call the A123 IPO an exit. And Twitter, is such an extraordinary story, if they can’t raise money on great valuations, who can? Activity like this is great after a long period in which there has been so little activity. Having said that, the question remains if this presages a better environment for less extraordinary stories. Fred Wilson makes a good point in his blog to...
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IPOs and the Venture Model
It is a truth universally acknowledged that investors in tech companies get the best exit valuations in IPOs. This has been accepted as axiomatic as long as I have been practicing law. As far as I can tell, when public companies get acquired the buyer usually pays a premium over the public valuation. This premium, often referred to as a control premium, suggests that there is “extra” value in not being public. If companies typically command a premium when control is sold, why are they not valued at a discount when they go public and control becomes diffuse? I can imagine a number of rationalizations...
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No Exit
LogMeIn has now successfully opened trading – the fourth IPO of a venture backed company since RackSpace in August of 2008. Four is better than zero. But if you consider how many there were in 2007 (fifty something, if memory serves me well), we still have a long way to go before there is an IPO market that will sustain the so-called venture model. In the meanwhile, consider a recent article in VentureWire to the effect that there were 137 M&A exits for venture backed companies in the first half of 2009, and – here is the truly alarming news – only 2...
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IPOs of venture backed companies in 2009
As of now there are three: SolarWinds, OpenTable and Medidata. It looks like LogMeIn will make the fourth. Before these you have to go back to RackSpace in August of 2008. Nothing else need be said. ...
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April bringing signs of life?
In yesterday’s VentureWire there were two articles indicating more signs of life in the entrepreneurial world. One had to do with M&A activity and the other with the NVCA ‘s efforts (such as they are) to bring back IPO activity. Based on my own subjective experience, ther is more postive buzz than there has been for some time. These two articles fit this mode. ...
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Ritual Wringing of Hands
I ran into Mike Feinstein in the hall a few days ago and he told me (now I am going to get the numbers wrong but he can correct them if he wants) that there are something north of 9000 venture financed companies out there and that last year (I probably have the time period wrong but it does not really matter) there were only about 30 M&A exits at valuations north of $150 million. The exits represent about .3% of the financed companies. That is what I think of a ski slope number. Let me tell you what I...
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IPO Watch
Well the new year is not exactly off to a roaring start. According to VentureWire, it appears that there were two (2) venture backed companies that filed for IPOs in January. They were Medidata Solutions Inc. and Open Table Inc. If this pace keeps up, 2009 will see 24 IPO filings, representing an almost 500% increase over 2008 but still something in the general neighborhood of one-third of 2007. Also, we need to remember that filed and closed are two different things....
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Funding and Exits
Anecdotal evidence indicates that in the current environment there are a lot of "extension" rounds or bridges from existing investors. The obvious reason for this situtuation is that it is hard to attract Series B and later round money in a climate where there is as much uncertainty as there is right now. By extension rounds, I mean selling additional shares of the previous round at the same valuation as the previous round to the same players. I suspect our research will show that Series B and later round activity in the second quarter was basically flat. We wont be able to...
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