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June 24, 2008

Fun with IPOs -- Unless You're a VC

The IPO market sucks. Maybe. Mostly. Let me explain.

Near as I can tell, there hasn't been a single venture-backed IPO in the second quarter of 2008, which would be the first quarter in which that has happened since ... well, as long as I have data. Admittedly, the first quarter was no hell either, with only 5 VC IPO babies making it out the door.

Here is the quarterly VC IPO data from 2005 until today:

Interestingly, however, while it sucks to be a VC relying on IPO exits, it hasn't been so bad for IPO investors. Consider: There have been 22 IPOs this year with market caps greater than $100m and initial share prices over $5 (a decent naive screen for likely institutional interest).

If you had bought an equal-weighted portfolio of said IPOs so far in 2008 here is how you would have done year-to-date:

The biggest gainer? Intrepid Potash (IPI), up 71% from the first-day close. The biggest loser? Verso Paper (VRS), down 17% from its first-day close. Overall, however, fairly impressive performance from 2008 IPOs considering what a crummy investment most people think IPOs have been this year.

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