January 26, 2006
IPO Obstacles Hinder Start-Ups
On the heels of our webcast on Tuesday – “Should We Merge or IPO?” – the WSJ ran this column about how start-ups backed by venture-capital investors are not going public as much (and as fast) as they used to in the “old days” of a few years ago. Here is an excerpt from that article:
“Last year, 41 start-ups backed by venture-capital investors became publicly traded U.S. companies, down from 67 in 2004 and 250 in the boom year of 1999, according to research firm VentureOne. Overall IPOs of U.S. companies also declined last year, but not as sharply, to 215, from 237 in 2004.
The drop in venture-backed IPOs isn’t just a hangover from the technology-stock bust early this decade, when bankers became gun-shy about taking small companies public. In 1995, 144 venture-backed companies went public, and 168 did so in 1992.
Venture-backed start-ups now also need more time to take the IPO plunge — more than 5½ years, on average, from the time of their first venture-capital investment, up from less than three years in 1998, says VentureOne, a unit of Dow Jones & Co., publisher of The Wall Street Journal.”
To learn more about this topic, check out the audio archive of the webcast.