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The IPO Market and Venture Capital Funding

Published: 7/3/2008 9:45:25 AM

The IPO market for a venture backed technology companies has gone completely dormant, according to the results of Q2, 2008.  There were no IPOs during the quarter, which has not happened since 1978.

While there are no doubt many reasons for these results, in my opinion, this is the continuing fallout from the extreme dot com boom/bust cycle of 1999 - 2003. The investment world (and regulatory system) has never really recovered from its skepticism about new, "IPO-ready" technology companies as a whole, regardless of individual success stories, so when other factors (credit crisis, economic uncertainty) increase the risk premium, the memory of being burned and scarred by tech companies is still vivid, and investors flee to quality, or sit on their hands.

I think what we'll continue to see it as a tightening of terms by VCs, lower valuations and a pruning of their lowest performing portfolio companies.  It behooves startup entrepreneurs to "improve their game" and provide the highest quality investment opportunity if they want to obtain funding for their technology startup company.

Don Jones

VentureDeal

 

Don Jones
CEO, VentureDeal

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