A Very Hard Landing for IPOs
It's official. The once-soaring IPO market has tumbled back to earth.
Entrepreneurs and venture capitalists have known for months that the get-rich-quick path of a year ago has all but disappeared. Now, the numbers are in to prove it. In the fourth quarter of 2000, the number of initial public offerings plunged to 16, down from 70 in the third quarter and 74 in the same period a year before, according to data compiled by VentureOne, a San Francisco-based research firm that tracks the VC industry.
And with far fewer IPOs, far less cash was raised: a total of $1.35 billion in the fourth quarter, compared with $6.59 billion in the third quarter and $7.13 billion in the final quarter of 1999.
The only real signs of life -- though anemic, at best -- were found in the biotech and information technology sectors. Of the 16 companies that went public last quarter, seven develop drugs and other medical treatments, and five produce hardware and software for communications and networking equipment. The largest single IPO, however, involved a semiconductor company, Transmeta Corp., which makes computer chips for laptops and handheld devices.
Not surprisingly, Web-based businesses weren't even on the IPO radar. While 22 e-commerce, B2B, and B2C companies went public in the final quarter of 1999, none did so at the end of 2000. "Enough people have been burned to know the market's not going to accept that," says John Gabbert, director of research for the VentureOne survey.
By Julie Fields in New York