With all the complaints heard around Silicon Valley about the tough IPO market, you'd think that when venture capitalists are fortunate enough to have a portfolio company achieve an IPO, they'd sell their shares. But, oftentimes the venture capitalists don't sell because they believe the IPO is just the beginning of a share rise.
That's the case of the private backers of video technology company DivX. John Tanner, DivX's CFO, told me this week at the Merriman Curhan Ford & Co. IP Video conference that he can't get them to let go and sell their shares.
Zone Ventures, DivX's earliest venture capitalist, owned 29.2% of the company at the time of the IPO in September last year. The Los Angeles-based firm didn't sell a share and now owns 23% due to dilution. WI Harper and Insight Venture Partners each sold just 10% of their shares at the time of the offering and maintain 11.3% and 7.8% respectively. The shareholders filed a statement of ownership in recent days but there are no signs they plan to sell shares and increase the company's float.
So far, the hold strategy has worked out. DivX shares were priced at $16 per share for the September 22 IPO and recently traded above $22 per share. All the VCs bought their shares when the company was private for under $3 per share.
For more on DivX, see:
Seeking Alpha
Tags: zone+ventures, divx,vc, venture+capital
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