RealTime IT News

No Let-Up In Sight for Internet IPO Activity

Like a wily boxer closing with a flurry to steal a round, April set a record for Internet IPOs, with 17 companies debuting on Wall Street, topping the 13 that went out in March.

But it took a big finish, as five Internet companies - Razorfish, Mpath Interactive, Marimba, Town Pages Net.com and AppliedTheory - launched public stock offerings last week alone. Those first three had among the best Internet IPO debuts ever (more on that Tuesday).

How hot is the Internet IPO market? Look at the total monthly offerings so far this year:

  • January - 4
  • February - 11
  • March - 13
  • April - 17

Now compare that to the number of Internet IPOs in the first four months of 1998:

  • January - 1
  • February - 3
  • March - 3
  • April - 1

For those of you not keeping score, that's 45 to 8. A pretty amazing difference. Indeed, there already have been more Internet IPOs this year than in all of 1998, when 34 Internet companies went public.

It's hard to imagine the Internet IPO market keeping up this pace, until you look at the huge amount of cyber-offerings clogging the pipeline. The Internet Stock Channel's IPO Watch lists 67 companies in the "on deck" circle, with several more filings from late last week to be added. (All told, there were nearly 30 IPO filings by Internet companies just in April.)

And the pool from which these Internet IPOs emerge is growing into an ocean. A report by venture capital research firm VentureOne shows that venture capitalists invested a record $2.1 billion in Internet companies in the first quarter. VentureOne also reports that 59% of all venture money went to Internet businesses.

Many Internet stock skeptics like to argue that the market is being driven by "irrational exuberance" and naive day-traders, and it's certainly true that many individual Internet stocks are vastly overvalued.

But venture capitalists are serious, knowledgeable investors who are pumping billions of dollars into Internet companies on behalf of their clients. It behooves individual investors to watch what the VCs do, for their commitment is an early indicator of a market's strength and potential.

Naturally, this bullish picture could change dramatically if the Internet market experiences a sudden downturn. It would, however, have to be deep and protracted; investors demonstrated last month that they are not easily spooked by one-day corrections, even when they come just a few days apart.

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