Bourse : la fete du slip !!! No, In Fact, We Haven't Seen This Movie Before. Thanks to monster private financings from Groupon and Facebook, as well as the promise of major IPOs from Demand, LinkedIn, Zynga and others, the predictable “watch out, here we go again” buzz is rising up in the press. This article from Ad Age, subtitled “With Billion-Dollar Dot-com Valuations Back in a Big Way, It’s Time for Alarm Bells to Start Ringing,” is typical of the bunch. With a “we’ve seen this movie before” tone, it points out that most of the successful companies of today had models that were tried ten years ago, and in the main they failed.
But I’d like to point out a couple pretty obvious differences between the dot com busts of a decade ago, and the companies that are now earning billion dollar valuations. To wit: - Each of the companies earning these valuations have revenues in the hundreds of millions or more, and operating profits in the tens of millions, if not more. . - The markets overall have changed dramatically, on many different fronts. Groupon I.P.O. Said to Value Company at $15 Billion. Jose More/Chicago News CooperativeA huge public stock offering would be a significant milestone for Andrew Mason, Groupon’s founder and chief executive. 9:40 p.m. | Updated Groupon, the social buying site that spurned a $6 billion offer from Google, is pushing ahead with plans for its initial public offering, a debut that could value the company at $15 billion or more. The company, which just raised a record $950 million from big investors, discussed a public offering with bankers this week, according to two people with knowledge of the deal who spoke on condition of anonymity because they were not authorized to speak publicly on the matter.
Banks are pitching Groupon on dizzying valuations at which they expect to take the company public, with many at $15 billion, these people said. Groupon, which is expected to make its debut in the spring, is prepared to meet with bankers again on Friday, according to the two people. “Morgan Stanley is one of the premier firms on Wall Street. Silicon Valley’s IPO Anxiety. November 15, 2010: November 15, 2010: [Follow Me on Twitter] “Living in the limelight The universal dreamFor those who wish to seem.Those who wish to beMust put aside the alienation,Get on with the fascination…” — Limelight from Moving Pictures, Rush If you could travel back in time to the early 1990’s and ask Silicon Valley’s top entrepreneurs and private company executives about their long-term career ambitions, you would hear a constant theme – they all wanted to be part of an Initial Public Offering (IPO).
Back then, taking a company public, either as a CEO, CFO, or founder, held an allure similar to that of a young athlete dreaming of making it in the major leagues. A great deal has changed since then. How Did It Get This Bad? There are many potential causes of this widespread pessimism. We may also have a perturbed notion of what a “healthy” IPO market looks like. How Bad Is It Really? A more optimistic eye can see that the IPO data is actually improving.
U.S. Demand or Supply Problem? Bashing The Collective Wisdom On IPOs. Bill Gurley penned a fantastic post about IPOs yesterday. Go read it. Bill presents a very compelling case that IPOs still have a role to play in the startup ecosystem and he also puts forth some strong data suggesting that the IPO market is coming back and good companies are taking advantage of it. But my favorite part is his counterargument to the point that Wall Street forces entrepreneurs and managers to run their companies with a short term focus (an issue I've long been concerned about). Bill writes: One recent argument knocking the IPO is as follows: Wall Street is too short-term focused, and that if you want to run your company for the long-term you should remain private. Back in the late 90s, my prior firm had somewhere between a dozen and two dozen IPOs out of a portfolio of 50 some names. However, even in my most bearish posts on the topic, I've always said that the best 10% of venture backed companies ought to at least consider an IPO. 1) Market Leader 2) Sustainably Profitable.
Skype IPO to take stage in 2011: sources. Hulu Is Seen as Readying to Go Public. Hulu prepares IPO amid battle with Netflix. Some IPO speculation. Inspired by Steve Blank’s post today about the “lost decade” of IPO’s, I’d like to make some predictions. Let me be clear: Steve is the historian. His posts are born of tremendous research into the secret history of Silicon Valley, and if you haven’t read those essays, you should. By contrast, what I’m about to say is pure speculation. The fact that IPO’s are disappearing makes intuitive sense to me. And the fact that the effects of this IPO vanishing act are being felt first and foremost in the software business also makes sense to me. My belief is that the root cause of the IPO shortage is that successful startup companies cannot find productive ways to invest large amounts of money to scale anymore. Ironically, the VC’s who depend on IPO’s and the CEO’s who are supposed to be creating them are struggling with the same basic problem.
The only way I can see to achieve sustained growth is to create an innovation factory. . We are living in a transitional moment. Fueling the IPO Fire? or Burning it Out? This weekend I was reading a blog post written by Chris Douvos. Chris is an investor in a number of well-known venture firms and writes a blog called Super LP. His commentary always cracks me up, even when he's writing about the finer points of risk curves, financial models and the like. In his post entitled "Keeping the Window Open," Chris cautions the investor community to not be too overzealous in taking companies public during this time when the gently re-emerging market is so fragile. As he rightfully points out, those companies that go public and then promptly miss their numbers, not only tank their own valuations but also spoil the markets for everyone else. If investors can't trust newly minted public companies to do what they said they were going to do, the markets will simply reject future public offerings as more of the same old head fake.
The conversation reminded me of the good old days when I was an attorney. IPO Dashboards — all about ipos. Are Startups Getting Crazy, Or Just IPO Crazy? Editor’s note: This guest post was written by Paul Kedrosky, a senior fellow at the Kaufman Foundation who blogs regularly about venture capital and finance at Infectious Greed. Walter Sobchak: Has the whole world gone crazy? Am I the only one around here who gives a shit about the rules? Mark it zero! - The Big Lebowski (1998) Yelp may have just turned down a half-billion dollar takeover offer from Google. Zynga does a crazy-big $180m funding. Maybe, but there could also be something important going on. Remember IPOs? I’m wagering we’re about to enter a similar period in 2010.
And what is a Netscape moment? It also helps if the companies represent a credible wave that investors can extrapolate to some giddy future. We’re facing a technology IPO tsunami. The Top Ten IPO Candidates For 2010. It’s been a long drought for IPOs, but venture capitalists and tech entrepreneurs are hopeful that 2010 will be the year they rain down on the Valley once gain.
Earlier this year, a handful of IPOs trickled out, such as OpenTable, Rackspace, and A123Systems. But what people are really waiting for is another Netscape moment—an iconic IPO which will whet investor’s appetites and open the floodgates for others to follow. Below is our list of the top ten IPO candidates for 2010 in the technology industry (and, no, it doesn’t include Twitter). I conducted an informal survey of some top VCs and angel investors. These are the names whispered about the most in the Valley and other tech circles. 1. If there is one company which everyone is looking towards for a new Netscape moment, it is Facebook. 2. Social game developer Zynga is on a tear, with more than 230 million people a month actively playing its games such as FarmVille, PetVille, and Texas HoldeEm Poker. 3. 4. 5. 6. 7. 8. 9. 10. Reply.com Files For $60 Million IPO. Local cost-per-click marketplace Reply.com wants to raise $60 million in an initial public offering.
The company filed its offering statement with the SEC this morning. Reply.com is a cost-per-click ad network which targets ads for local businesses. Its strategy is to gather more information from consumers who click on their ads by inserting a “middle page” between that pops to ask them where they live or what brands they like to improve targeting before showing them an ad. Revenues rose 75 percent in 2009 to $32.6 million. Since 2005, the company has raised $27.5 million from Scale Venture Partners, Outlook Ventures, ATEL Ventures, and Debi Coleman, a former CFO of Apple. Zamani was previously the co-founder of Autoweb, and he’s been bankrolling the Reply.com. Click on the tables below to see its consolidated income statement. Zynga Would Be Valued At $5 Billion If It Were Public Today. IPOs Just Aren't What They Used To Be. I spent the day yesterday with VCs from other firms.
I heard two stories about IPOs that are worth sharing. One VC told me a story about a failed IPO for one of their portfolio companies a few years ago. He told me the legal and accounting bill they got after the IPO was pulled was $3.5mm. Yup, $3.5mm for an offering that was not successful. The second story has a happier ending. It was about an IPO of a company that happened recently. Taken together, these stories tell a sad tale about the IPO market. I used to think that the IPO was the ultimate exit for a venture backed company. I believe that the IPO exit is appropriate for only the very best companies, maybe one or two companies per fund, which would be the top 5 or 10 percent of our portfolio.