Venture capitalists have been griping about Sarbanes Oxley and the lack of public market exits for a couple of years now. Recently, they’ve started whistling a more optimistic tune.
Funds stand poised to make significant returns in the next few months, with a slew of venture-backed offerings coming to market and waiting in the pipeline. Last week’s star offering- the $139 million IPO of BigBand Networks, a developer of technology for distributing digital media, provided the latest big public market exit.
Venture funds invested $90 million in BigBand over six rounds of financing between 1999 and 2004, according to Thomson Financial. Redpoint Ventures and CRV are the largest venture stockholders in BigBand, owning 23% and 19%, respectively, of outstanding shares after the offering. Redpoint’s shares were worth $221 million and CRV’s were worth $187 million as of the close of first-day trading Thursday.
BigBand’s offering is one of several launched in recent weeks by VC-backed companies which raised initial funding during the dot-com boom. Other recent offerings include those carried out by wireless broadband network builder Clearwire, which raised $600 million in its IPO the week before BigBand’s debut, and security service provider SoureFire, which raised $78 million in its IPO.
More offerings are in the works, too. Overall, IPO filings by VC-backed companies on U.S. exchanges are up in 2007. So far, IPO returns are also up a bit. As of mid-March, 12 venture-backed companies had gone public in 2007, raising a total of $1.74 billion, according to Thomson Financial, compared to 20 IPOs raising $1.6 billion in Q4 of 2006.
Is it the start of another IPO boom? Venture capitalists aren’t sure, but most seem to it as inarguably a positive development.
“I think it’s the beginning of an up cycle,” says Santo Politi, general partner at Spark Capital, and a former director of BigBand. “There’s clearly an appetite in the market for new issues with high growth rates.”
See this and other stories from this week’s Private Equity Week and the upcoming April issue of Venture Capital Journal.