IPO Market Was Static In 2003

There wasn't much movement in the number of initial public offerings in 2003. Despite a slight increase in the number of IPOs by venture-capital-backed firms last year, the actual amount raised fell by 16%. Twenty-one American companies backed by VC firms went public in 2003, raising $1.37 billion, down from the $1.64 billion raised in 2002, VC-information provider VentureOne said in a report issued Monday. Though health-care-related IPOs continued to rise last year, IT companies represented about half of the companies going public, with more than half the money raised from the IPOs.

The year began slowly; there were no IPOs of VC-backed ventures during the year's first quarter. Still, the year ended with one more initial public offering than in 2002. But the number of IPOs in recent years pales with the heyday of 1992 through 2000, when the annual number fell beneath 100 only once.

The peak year was 1999, when 249 IPOs raised nearly $19.43 billion.

VCs are requiring funded companies to have more private equity before going public than they did in the past. The median investment by private investors in the firms prior to their IPOs was a relatively high $60 million, up from $49 million in 2002. Before 1998, the median raised prior to an IPO never topped $20 million. In addition, the typical company receiving VC capital had been in business for nearly six years, up from just over 3-1/2 years for those going public in 2002. In 1999, by comparison, the typical company going public was barely 2 years and 10 months old. The only company founded after 1999 to have an IPO last year was the software and services company Kintera Inc. The oldest of the group: Tessera Technologies and Digital Theater Systems Inc., both founded in 1990.

Last year's biggest IPO winner: integrated circuit developer SigmaTel Inc., which raised $105 million in a September offering--and has since seen its market capitalization increase by 58%.