As the line in the cheesy old song goes, you gotta know when to hold 'em.

For venture capitalists who have patiently waited for years to see the high-profile technology startups they have backed graduate into public markets, the decision has been fairly straightforward.

Almost without exception, the VCs with significant stakes in high-profile, newly public companies including professional networking service LinkedIn Corp., online music company Pandora Media Inc. and data storage technology company Fusion-io Inc., have opted to sell no shares in their initial public offerings. "All the money was made on Microsoft and Cisco after their IPOs," says New Enterprise Associates general partner Mark Perry. "It's all about our belief in the company; if you get a quality company, you want to hold on and see it do well."

In truth, it would have been far more surprising if the major VC holders in these offerings sold all or even a portion of their holdings in the IPOs. After all, doing so could spook potential buyers of the newly minted stocks. "The best sign for the longer-term prospects of a company, the greatest signal you can send to the market, is when insiders are not selling," says E. John Park, a partner with Morgan, Lewis & Bockius LLP.

That doesn't mean blue-chip VC firms such as Sequoia Capital (LinkedIn's biggest institutional investor), Crosslink Capital (Pandora's top investor) and NEA (Fusion-io's largest backer) are breathing easy as they wait through six-month lockup periods.

Pandora shares, which peaked as high as $26, or 63% above their IPO price, during their first day of trading June 15, settled to close that day with a 9% gain. The following day, the shares closed at $13.26, a 24% decline and well below the shares' $16 IPO price. This happened against the backdrop of broader market volatility and some analysts' slapping a sell rating on Pandora shares as the company faces challenges with its business model and isn't profitable.

But even shares of LinkedIn, which is turning a profit, retreated to a recent closing price of $68.27. LinkedIn shares had more than doubled on their first day of trading May 19 to close at $94.25.

Some analysts have argued that LinkedIn shares could drop to $30 once insiders are allowed to sell, a notion that is sure to engender much discussion among VCs as the six-month lockups on these shares approach. Perry, who sat on the boards of digital-TV-recording company TiVo Inc., enterprise software designer Hyperion Systems (which is now part of Oracle Corp.) and chipmaking software maker Magma Design Automation Inc. as they went public, says his firm's approach to deciding how long beyond the lockup to hold shares is pretty simple: If a stock looks like it will be worth twice as much in a year, it stays in NEA's portfolio.

"If we think there's a potential for a double in a year, and there's a really solid team that's just hitting their stride, we would hold," Perry says. "If you feel like the investment is fully valued and the risks are on par with the opportunity, then we distribute to the limited partners."

Menlo Ventures managing director Shawn Carolan argues that when a company goes public things begin to get interesting, and that investors should take a long-term view. "I don't think of the IPO as an exit," he says. "It's a beginning for the company because it finally gets a sense of what the world thinks of it. If I can continue to add value [as a board member] and help double the stock price, then a $100 million investment can become $200 million."

Carolan managed his firm's investment in TeleNav Inc., a provider of location-based services such as voice-guided navigation for mobile phones that went public in May 2010. Carolan, who still sits on the company's board, says his firm holds about 15% of the company and has not sold any shares.

"If you look at all the companies that have gone public, the good ones are worth 10 times or 100 times more than their market caps when they went public," he says.

TeleNav shares went public at $8 and recently hit a 52-week high of $18.10.

Carolan's firm also owns nearly 32% of Carbonite Inc., a provider of cloud-based data storage services that filed to go public in May. He says the recent spate of technology initial public offerings has reminded investors that innovative companies do make worthy public investments.

"It's not that tech wasn't alive before these IPOs, but investors, who have had their money in cash accounts, had been scared for a while," Carolan says. "With these latest IPOs, people's imaginations light up, and that leads to a new sentiment and momentum and awareness."

Whether that will produce more investments worthy of staying in venture capitalists' public portfolios for longer than six months is yet to be seen.

See the complete archive of Silicon Valley Special