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Venture-Backed IPO Market Activity Continues to Lag


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  • 1. Emily Mendell, The Weiser Group for NVCA, 610-359-9609, Joshua Radler, Thomson Venture Economics, 973-353-7139, VENTURE-BACKED IPO MARKET ACTIVITY CONTINUES TO LAG CONSIDERABLY AMIDST LACKLUSTER CORPORATE INFORMATION TECHNOLOGY SPENDING Newark, NJ- July 1, 2003—Two venture-backed companies completed Initial Public Offerings (IPOs) worth $164 million in the second quarter of 2003, according to Thomson Venture Economics and the National Venture Capital Association. As in the first quarter of this year, the overall IPO market window remained extremely narrow with only five total companies going public in the second quarter. “Corporate information technology and other capital expenditures are way off and that affects a young company’s ability to achieve revenue traction and subsequently profits, ” said John S. Taylor, Vice President of Research at the National Venture Capital Association. “With the public markets becoming increasingly demanding for proven track records, it is a rare company that can meet these tougher financial criteria in the current environment.” iPayment, Inc., whose investors include First Avenue Partners and Randolph Street Partners, raised $80 million, while FormFactor, Inc., backed by Institutional Venture Partners and Mohr Davidow Ventures, raised $84 million in the second quarter. While the total number of venture-backed IPOs in 2003 has been low, the companies that have gone public have been rewarded with strong post-offering market values. All three of the venture-backed companies that have issued IPOs this year are now trading above their offering prices. Analysis of Recent Quarters' IPOs Total Avg. Number Total Avg. Venture Venture of Venture Venture Backed Backed Venture Backed Backed Post Post Backed Offering Offering Offering Offering Quarter Number IPO's in Size Size Value Value Ending of IPO's the U.S. ($Mill) ($Mill) ($Mill) ($Mill) 19 9 650.1 72.2 2,902.3 322.5 3/31/01 29 9 710.5 78.9 4,220.6 469.0 6/30/01 11 5 279.9 56.0 994.6 198.9 9/30/01 29 14 1,447.7 103.4 5,912.5 422.3 12/31/01 21 4 376.3 94.1 2,398.0 599.5 3/31/02 40 14 1,336.1 95.4 5,339.1 381.4 6/30/02 7 1 30.0 30.0 153.4 153.4 9/30/02 26 4 231.2 57.8 523.8 130.9 12/31/02 3 1 77.2 77.2 147.8 147.8 3/31/03 5 2 164.0 82.0 695.3 347.6 6/30/03
  • 2. Although the first half of 2003 saw minimal IPO activity, the pipeline shows six venture-backed companies “in registration” with the Securities and Exchange Commission. These companies have filed with the SEC over the course of Q2 2003, and are now preparing for their public offerings. Venture Economics Post-Venture Capital Index (PVCI) Annualized Return as of 06/30/2003 Index Year to One Year Three Five Year Ten Year Value Date Return Year Return Return Return 432.87 34.1% 19.8% -29.8% -6.3% 6.1% PVCI 974.50 10.8% -1.5% -12.5% -3.0% 8.0% S&P 1622.80 21.5% 10.8% -25.8% -3.1% 8.7% NASDAQ 8985.44 7.7% -2.8% -4.9% 0.1% 9.8% DOW The National Venture Capital Association (NVCA) represents more than 450 venture capital and private equity firms. The NVCA’s mission is to foster the understanding of the importance of venture capital to the vitality of the U.S. and global economies, to stimulate the flow of equity capital to emerging growth companies by representing the public policy interests of the venture capital and private equity communities at all levels of government, to maintain high professional standards, to facilitate networking opportunities, and to provide research data and professional development for its members. For more information about the NVCA, please visit Thomson Venture Economics, a Thomson Financial company, is the foremost information provider for equity professionals worldwide. Venture Economics offers an unparalleled range of products from directories to conferences, journals, newsletters, research reports, and the Venture Expert™ database. For over 35 years, Venture Economics has been tracking the venture capital and buyouts industry. Since 1961, it has been a recognized source for comprehensive analysis of investment activity and performance of the private equity industry. Venture Economics maintains a long-standing relationship within the private equity investment community, in-depth industry knowledge, and proprietary research techniques. Private equity managers and institutional investors alike consider Venture Economics information to be the industry standard. For more information about Venture Economics, please visit Thomson Financial Thomson Financial is a US$2 billion provider of information and technology solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation (, a leading provider of integrated information solutions to business and professional markets worldwide. The Corporation reported 2001 revenues of US$7.2 billion and its common shares are listed on the Toronto and London stock exchanges (TSE:TOC).