Trinity Ventures' Gus Tai thinks 2008 could be a good year for technology IPOs. One driver: Next
year will mark the graduation of the class of well-run startups founded
in 2002 and 2003, which will fuel the offering pipeline. The other trend he sees is a resurgence of innovation
surrounding the enterprise. "There
hasn't been much noise on innovation in the enterprise," Tai says. "The
first half of this decade companies spent consolidating.
"Two thousand-eight will see the harvesting of great investments from lean years, and is also going to be the year that a lot of new seeds will be planted that will sprout in five years or so," he adds.
One of Tai's most notable investment wins was Photobucket, the video- and picture-sharing service acquired earlier this year by Fox Interactive Media Inc. for an estimated $250 million to $300 million. He also was an early investor in online jeweler Blue Nile Inc., which went public in 2004. While acknowledging that a small percentage of tech startups -- somewhere in the 20% range -- go public, Tai is still bullish on the exit prospects for young venture-backed company IPOs. And like most successful VCs, Tai repeats the mantra that no company should be built to be acquired, despite the fact that that is the most common outcome for startups.
"As you aggregate success, you keep raising the bar," he says. "Then, as you get closer to the size where going public is an alternative, you increase your options to liquidation."
Profitability is no longer an imperative, but a key metric is how well a company serves its customers, Tai says. "Startups go public because they have cracked the code on how to satisfy customers. That is a catalyst to accelerate growth and lead companies to win." - Olaf de Senerpont Domis
See May 31 story from TheDeal.com
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