Archive for June 22nd, 2010

Here is some hard IPO news from Techflash.

“Something remarkable happened last week. A Seattle area technology company actually completed an initial public offering.

Bellevue-based Moricity raised $50 million through a public offering, marking the second technology company from the state to go public in the past eight months. That’s the good news.

Now, here’s the bad news. Motricity had to slash its offering price in order to complete the deal, drastically reducing the money it raised from the initial $250 million it had projected. Even worse, shares of the mobile software company have been falling in the past two days of trading, now at about $9.05.

And Motricity isn’t the only publicly-traded company encountering troubles in the public markets. Omeros, the Seattle biotech company which went public last October, has lost 30 percent of its value since the IPO.

Going back further, Clearwire — the Kirkland mobile broadband provider that first priced shares in March 2007 — has lost 69 percent of its value since it started trading.

What does this all mean?

For one thing, there’s certainly some chatter that the IPO isn’t necessarily the best outcome for most tech companies anymore. Venture capitalist Fred Wilson wrote on his blog this weekend that he preferred a sale to an IPO in most situations.

“The cost is just too high and the benefits are just too low for most companies these days,” Wilson wrote.

Meanwhile, TechCrunch followed that up with a story titled “The Poor, Pilloried Tech IPO” in which Erick Schonfeld writes that the best and fastest growing tech companies (LinkedIn, Facebook and Skype) are avoiding the public marketplace.

There’s a bigger problem going on here for the venture capitalists, which historically have relied on IPOs to produce some of their biggest returns.

As we’ve reported before, the Seattle VCs have missed out on these results. The pipeline right now for prospective IPO candidates from Washington is pretty dry. (Bellevue-based Intelius has filed to go public with the SEC but has not updated the S-1 since last October).

And even when a Washington company does break out of the mold and goes public, they have not had connections to the Seattle VC community.

(Interestingly, of the three Washington tech companies that have gone public in the past three years, only Omeros boasts a Seattle venture firm (Arch Venture Partners) among its top backers).

The lack of IPOs speaks to an issue that we’ve discussed in the past, and was a topic of discussion at last week’s TechFlash Town Hall on venture capital and bootstrapping.”

Read the whole article here.

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