The Deal
Saturday, November 21, 
8:10 pm

The slow return of the Tech IPO

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The IPO hype machine received another boost today when Business 2.0's Michael Copeland wrote that the Tech IPO is back.

I'm not so sure. If the Tech IPO was back, why did the local investment bank touting that fact more than any other sell out to a little known British rival yesterday? And why are so few offerings actually getting done?

The Tech IPO is back when any IT company meeting the criteria of a five year operating history, predictable revenue in excess of $50 million and profitability or a clear path to profitability can easily sell some of its shares on the market. And by market, I don't mean AIM. I mean Nasdaq.

Of the more than 5000 privately held high-tech startups around the world, I would guess there are at least 2% that match that profile. Yet, there are only a handful seriously thinking about an IPO right now. If those companies were operating in an equally risky industry that didn't have the word technology in it, more would be considering IPOs now.

Are things better than they were? Absolutely. They have been steadily improving since the fall of last year. Three of the top ten performing IPOs last year hailed from the IT industry. But, until the stigma attached to high-tech companies stemming from the Bubble era is removed, the Tech IPO won't truly be back.

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