A VC - Latest Comments in The End Of The IPO Drought Is Coming

Re: The End Of The IPO Drought Is Coming

MLM — Mon, 29 Jun 2009 14:28:52 -0000

Renaissance Capital offers some insight into how to get the IPO market moving again...
http://www.renaissancecapit...

Re: The End Of The IPO Drought Is Coming

Mo — Thu, 14 May 2009 19:28:30 -0000

great points regrading the potential of IPO's coming back sooner rather the later, I hope you are right!

Re: The End Of The IPO Drought Is Coming

fredwilson — Fri, 08 May 2009 00:07:13 -0000

I think the buyers want to own stocks that will make them money, plain and simple

There is the issue of small caps and floats

I don't have a good answer for that

I-banks that are focused on this oppty can help but its not the primary issue in my opinion

Re: The End Of The IPO Drought Is Coming

obscurelyfamous — Thu, 07 May 2009 14:25:58 -0000

I think this is because of a CSS conflict with this page. Taking a look now... thanks!

Re: The End Of The IPO Drought Is Coming

ventureblogalist — Thu, 07 May 2009 13:20:39 -0000

Fred, at institutional level, is a stronger effort required by i-banks to market IPOs or more so that buyers need to roll up sleeves give more consideration to these opportunities.

Re: The End Of The IPO Drought Is Coming

fredwilson — Wed, 06 May 2009 10:03:32 -0000

I agree. That's why I listed ebitda and income multiples

I think 15-20x current year is about the same as 12-15x forward if it’s a growth company

Re: The End Of The IPO Drought Is Coming

Steve — Wed, 06 May 2009 08:20:44 -0000

Negotiated between major shareholders and the underwriter, disclosed in the prospectus.

Re: The End Of The IPO Drought Is Coming

Steve — Wed, 06 May 2009 08:13:56 -0000

"overblown and largely discredited fees structures" Huh? Banks don't make any money on technology related IPO's - at least those below $75MM. They used to make it up on having proprietary knowledge about trading flows, but that game is dead with decimalization.

Re: The End Of The IPO Drought Is Coming

Steve — Wed, 06 May 2009 08:10:11 -0000

15 to 20 X earnings? That is highly optimistic. Much more realistic is 12 to 15x forward earnings IF the company has 3 or more quarters of operating profits AND is growing at 20 to 30% per year in a sustainable fashion.

People need to focus on profits, not revenue if you want an IPO market back. The old, tried and true metric was 3 quarters of operating profit with operating income in the double digits as a percent of revenue.

Re: The End Of The IPO Drought Is Coming

fredwilson — Wed, 06 May 2009 07:10:12 -0000

There are signs: changeyou and rosetta stone and hopefully open table. Being first is not always best so I don't think we'll see a rush

Re: The End Of The IPO Drought Is Coming

fredwilson — Wed, 06 May 2009 06:51:12 -0000

They (disqus) need to package that 'embed this comment thread" functionality better and make it easier to find and do

Re: The End Of The IPO Drought Is Coming

fredwilson — Wed, 06 May 2009 06:46:12 -0000

Its not a legal issue. We just need to agree as an industry and do it. Lack of leadership and creative thinking at the nvca is unfortunate

Re: The End Of The IPO Drought Is Coming

Kevin Cimring — Tue, 05 May 2009 20:43:14 -0000

Hi Fred,

I especially agree with your point 4, that investors are going to "look for simple businesses, products they can understand, balance sheets with cash and not much else, and growth without leverage".

We've been beguiled too often by smoke and mirrors - its time to return to basic business principles no matter what industry the company being evaluated may operate in.

Re: The End Of The IPO Drought Is Coming

Joseph Lizio — Tue, 05 May 2009 15:15:55 -0000

I have to agree - regardless of how cheap and easy it is to start a business these days - it does require some outside push to really take it to that perfect level. Usually as a company starts to realize significant revenue - it just goes right out the door as it cannot keep up with development or innovation or even the founders sucking out the cash.

Althought I do like the idea of having many different companies doing what one big company does today - e.g. I rather have 20 different Fords then just one really big Ford.

Regarding the IPO market - two thoughts - Do you really see signs or are you just hopeful? If the window does open, will there be a mad dash and will the first ones there (not necessarily the best one) get the cash?

Re: The End Of The IPO Drought Is Coming

ronkornfeld — Tue, 05 May 2009 09:46:29 -0000

True, and it often doesn't create adequate returns. This is particularly true for the common shareholders after all of the preferences have been cleared on a smaller transaction.

Re: The End Of The IPO Drought Is Coming

vruz — Tue, 05 May 2009 09:42:22 -0000

some things like the 'like' and 'report' buttons are not working for me.
but most of the functionality seems to be doing good. it's a good idea that comments travel together with the original article and without having to create yet another account on this website (posting from Silicon Alley Insider).

Re: The End Of The IPO Drought Is Coming

Mark Essel — Tue, 05 May 2009 09:08:11 -0000

Is changing lockups a matter of legislation or a customized legal doc you agree upon as a VC or startup?

Re: The End Of The IPO Drought Is Coming

Mark Essel — Tue, 05 May 2009 09:00:25 -0000

If you're asking me, I'd say it is already ;)
I'd wager students following your blog actively (commenting, reblogging) for a semester would gain AT LEAST as much information as they would in 2 MBA courses.

And they'd have better retention of the material and greater understanding as well.

Re: The End Of The IPO Drought Is Coming

fredwilson — Tue, 05 May 2009 08:51:51 -0000

i think VC lockups should be restructured. make them 2-3 year lockup agreements with something like 20% being released each 6 months from the data of the IPO. then you'd get the VCs thinking like public market investors and not sellers dying to get out

Re: The End Of The IPO Drought Is Coming

fredwilson — Tue, 05 May 2009 08:47:26 -0000

i've said this in other parts of this comment system, but services that are social and scale require large investments in "environmental remediation and governance"

Re: The End Of The IPO Drought Is Coming

fredwilson — Tue, 05 May 2009 08:45:59 -0000

leaving a comment at Alley Insider to prove to my friends that this is the same comment thread currently running at AVC

Re: The End Of The IPO Drought Is Coming

fredwilson — Tue, 05 May 2009 08:17:17 -0000

Why can't this blog be an online unoiversity?

Re: The End Of The IPO Drought Is Coming

fredwilson — Tue, 05 May 2009 08:13:18 -0000

That 'farm system' model is alive and well but I think we've become too reliant upon it

Re: The End Of The IPO Drought Is Coming

fredwilson — Tue, 05 May 2009 08:12:26 -0000

Yes, yes, yes

Valuing these businesses reasonably and setting the proper expectations for growth and earning power is important

I also think lockups should be structured differently. Instead of letting everyone out in 180 days, we ought to break it up in fifths and let everyone free for 20pcnt every six months

Re: The End Of The IPO Drought Is Coming

fredwilson — Tue, 05 May 2009 08:12:25 -0000

Great comment

Great example