"I think we will see the end of the
IPO drought for venture backed companies within the next year, possibly by the end of this year," writes Union Square Ventures co-founder Fred Wilson in a Monday blog
post. "I don't know if this market rally we've been having is a headfake or the end of the bear market. My gut says we'll see at least one more pronounced down move before we see bottom. But either way, at some point investors are going to want to own stocks again, and when they do, I think the old fashioned VC-backed IPO will have quite a bit of appeal."
There were no venture-backed IPOs in the fourth quarter of last year and none in the first quarter of this year. April saw a glimmer of hope in the IPO of venture-backed Bridgepoint Education Inc. Another bright spot last month was private equity-backed Rosetta Stone Inc.'s IPO.
Wilson outlines five reasons why he thinks the time may soon be right for public offerings, including his belief that "there are a lot of really solid companies sitting in venture portfolios waiting for the right moment to go public."
And he weighs in on last week's four-point plan to stimulate IPOs from the National Venture Capital Association.
"Regular readers know that I am a huge fan of the secondary market idea and I welcome the NVCA's attention and energy on that issue," says Wilson. "On the other three, I think they are wasting their time. It's like the government suing Microsoft while Linux was growing in popularity right under their noses. I believe the market will take care of this problem as soon as we get a market that wants to purchase equities. And my gut says that time will come sooner than most think." - Mary Kathleen Flynn
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