Dixon Doll, co-founder of venture-capital firm DCM, said he expects 80 to 85 U.S. venture-backed companies to sell shares to the public this year, up from 72 in 2010, as investor appetite for risk picks up.
About one-third of venture-backed IPOs in the U.S. this year will come from companies based in China, Doll said in an interview yesterday. His prediction follows business-networking website LinkedIn Corp.’s Jan. 27 filing to raise $175 million in an IPO. Kayak Software Corp. and Responsys Inc. announced plans to go public late last year.
Venture-backed IPOs increased in 2010 following the slowest two-year stretch since the mid-1970s, with 18 in 2008 and 2009 combined, according to the National Venture Capital Association. The Nasdaq Composite Index has surged 75 percent since the end of 2008 as technology companies recovered from the financial crisis and now sit with record amounts of cash on their balance sheets. With growth in the stock market, Doll said his prediction for IPOs may be conservative.
“I hope I’m wrong and I hope it gets into triple digits,” Doll, 68, said in a separate interview with Bloomberg Television yesterday. “I absolutely believe the improvement will continue in 2011.”
A year ago, Doll projected there would be about 50 venture-backed IPOs in 2010. That looked like it would be accurate until the fourth quarter, when 32 companies had initial share sales, the most in any period in a decade, according to Arlington, Virginia-based NVCA.
DCM in China
Half of last quarter’s IPOs were companies based in China. Bitauto Holdings Ltd., a Doll-backed company that provides Internet content for China’s automotive industry, was among them and is traded on the New York Stock Exchange. E-Commerce China Dangdang Inc., another of Doll’s companies, also went public on the New York Stock Exchange. Ruby Lu, a partner at Menlo Park, California-based DCM, is on the board of both companies.
Doll said DCM was the first U.S. venture firm to open an office in China and has adapted to the country’s strict rules that govern content distributed over the Web.
“We try to be squeaky clean in everything we do there to provide valuable services that the Chinese government is in favor of,” said Doll, whose firm has an office in Beijing.
DCM has invested in more than 120 companies since 1996 and currently manages $2 billion, according to its website. Doll has been in the technology industry for more than 35 years, and served as the chairman of the NVCA from 2008 to 2009.