Going public has long been the dream for tech company founders and their investors. But the last few years have not been good for companies hoping to do an initial public offering (IPO). The financial crisis and Sarbanes-Oxley reporting requirements severely limited their number.
But the IPO market seems to be thawing. Q4 2009 has already seen the most IPOs since Q1 of 2008. Last week security software company Fortinet had a very successful offering and several more IPOs are slated for debut before the year is out.
2010 also looks to be a much stronger year for IPOs. The drivers are:
1. The economy and stock market are improving, opening the IPO window for companies that have shown the ability to thrive during the downturn.
2. Successful private companies with strong operating track records are positioning to go public. Facebook is the best example and their recent announcementof creating two stock classes indicates they are on the IPO path.
3. Investor interest in clean tech and environmental company public offerings. Several clean tech firms, including electric car company Tesla Motors and smart grid supplier Silver Spring Networks, appear to be planning 2009 IPOs. Neither of these companies is reported to be profitable. They will be going public on a future growth story - a clear indicator of renewed investor interest in growth IPOs - at least in clean tech.
While the glory IPO days of the late 90s are not going to return, we expect 2010 will be a much stronger IPO year than the last few. The industries likely to lead the IPO markets are social computing, clean tech, security and cloud computing.