May 14 (Bloomberg) -- DigitalGlobe Inc., a provider of satellite photography to Google Inc. and the U.S. government, climbed 13 percent after raising more than planned in an initial public offering.

DigitalGlobe rose $2.50 to $21.50 at 4 p.m. in New York Stock Exchange composite trading. Shares of the Longmont, Colorado-based company climbed as high as $25 earlier in the session.

The company attracted investors during an IPO drought because of its ties to the government and its fleet of satellites, said Matt Therian, an analyst at Renaissance Capital in Greenwich, Connecticut. DigitalGlobe is launching a third satellite this year, which may help almost double revenue.

“This industry has a lot of barriers to entry: It takes $400 million to $500 million to build a satellite, and you need a relationship with the federal government,” he said. “If they can get their next satellite up there without any issues, it has the potential to throw off a good bit of cash.”

The IPO raised $279.3 million yesterday, pricing 14.7 million shares at $19 each. That was higher than the anticipated range of $16 to $18. Most of the proceeds went to hedge funds and institutional investors. More than 12 million shares traded today, indicating that many investors flipped the stock for a quick gain.

Google Earth

Instead of using the IPO money for its latest satellite launch, the company borrowed $355 million last month. DigitalGlobe vies with Dulles, Virginia-based GeoEye Inc. in the satellite-imaging market, making most of its revenue from government customers. Google Earth service and Microsoft Corp.’s MSN Web portal also use DigitalGlobe’s photos.

The market for remote image-taking technology was $7.3 billion in 2007 and will grow to $9.9 billion by 2012, the company said in a filing, citing a report by BCC Research of Wellesley, Massachusetts.

DigitalGlobe is only the third U.S. technology IPO this year. The deal follows offerings from Rosetta Stone Inc. and Bridgepoint Education Inc. last month. No startups staged IPOs in the fourth quarter of last year or the first quarter of 2009 -- the first time that’s happened in at least 38 years.

ExactTarget Inc., an Indianapolis-based e-mail marketing company, canceled its planned $75 million IPO last week. It raised $70 million in venture capital instead.

Hedge funds and institutional investors had invested $470 million in the company, including a $100 million 2006 financing arranged by Morgan Stanley, the company’s largest stockholder.

Morgan Stanley was set to own 32 percent of DigitalGlobe after the IPO, according to regulatory filings.

To contact the reporter on this story: Tim Mullaney in New York at tmullaney1@bloomberg.net

Last Updated: May 14, 2009 16:18 EDT