Tech IPOs 2006 vs. 1999

Dec.11.06 | About: Oracle Corporation (ORCL)

Interesting article in Business Week on NetSuite’s potential IPO. NetSuite is a Larry Ellison-backed software company that is like (NYSE:CRM) in the sense that it’s web based, but unlike which focuses on sales planning and account management, NetSuite helps small and medium sized businesses with accounting and financial statements, the “underpinning of a business,” according to Oracle’s (NASDAQ:ORCL) Ellison.

For one thing, it’s odd that Oracle’s board has not raised an issue with Ellison owning well over 50% of a company (after a potential IPO, he owns much more now, having invested the bulk of the $100M NetSuite has raised) that is technically competing in a space that Oracle should have a foothold in, but alas…

Second, the article has an interesting stat that is explained partially by Sarbanes Oxley making it more expensive for companies to go public, and by the fact that Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) have continued to scoop most companies early on before they scale enough to file for an IPO.

Anyway, the stat: in 1999, there were 323 IPOs which raised $31.6 billion, compared to a paltry $4.9 billion raised in 2006 through a mere 32 IPOs.

Of course, there’s also much less VC money being invested, and 1999 was the beginning of the before the Nasdaq bubble… but still; that’s 90% less IPOs a mere seven years later.

The company’s 2006 revenues were in the $70M range, backing what I have been saying for some time, when it comes to IPOs, $50M is the new $100M (at least for online companies).