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The tech IPO market goes in cycles, just like how spring is followed by summer, autumn and winter and then returns in a year again. A well respected VC shared with me some of his studies on the cyclic nature of the IPO market – one of the key conclusions is that the peak between two adjacent IPO markets is about nine years. Using this as a rough benchmark, the next IPO boom is around the corner.
So is 2007 the year of tech IPO resurgence? There are positive signs.
- According to RedHerring: “If you think the shopping malls are crowded this holiday season, take a look at this week’s IPO calendar. If everything gets out the door, it will be the busiest IPO week in two years. Bankers plan to price 20 IPOs during the week of December 11. The last time that more deals made it to market in a single week was during the week of December, 13, 2004, according to available reports. Bankers priced 21 IPOs back then”.
- Tom Tauli says in his September 18th 2006 analysis “Software IPO Outlook”: after years of M&A and LBO exits, the rare "software IPO" may be making a comeback in the coming year.
- The recent IPO of Isilon Systems, a relatively unknown storage system and software company from Seattle, excited many bankers and tech companies. Its share price skyrocketed on its debut day and ended with the best opening performance for a technology IPO in more than six years. With an opening price of $25 per share, it peaked at $27.45 -- more than double the $13 offering price -- before settling down around $23, giving the money-losing $50M revenue company a $1.4 billion market cap.
So who are the hot IPO candidates for 2007?
NetSuite is one. Michael Arrington reports that “NetSuite’s Going Public, Looking for $1 Billion Valuation”. I have also heard from my sources that NetSuite is going public. With $70M in revenue and the excitement around SaaS in general, this evil twin brother of Salesforce.com may well crack open the IPO market.
FaceBook is another heavily speculated IPO candidate. With the Yahoo acquisition possibility off the table at the moment, the possibility of IPO is much higher. It will be amazing to see how it is valued by the public market. I wrote a few months ago on the highly successful IPO of a social networking site in Japan, mixi.jp (Web 2.0 in Japan )
In New England, there is a log of speculation about BladeLogic, a data center automation software company. The team led by Vijay and Dev and investors like David Tabors and Ullas Naik have been doing a great job in building a solid business.
Who are the other IPO candidates that you can think of?
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