Technology incubator idealab! late Wednesday became the latest in a host of companies to withdraw registration for a proposed IPO.
The company filed for the IPO on April 20, 2000, after announcing in March that it had raised $1 billion in equity financing. The company had hoped to raise as much as $300 million in the IPO.
idealab!’s withdrawal is part ironic twist — the company exists to nurture fledgling technology businesses from start-up to IPO after all — and part pragmatic understanding that the market’s feverish pursuit of IPO windfalls is subsiding as investor confidence crumbles.
“Over the past several months, we have seen dramatic shifts in the market and determined that it is in the best interest of the company, its employees and investors, that we not proceed with the IPO during this volatile time,” said Bill Gross, chairman and chief executive officer of idealab!. “We will continue to do what we have always done best: build great companies. We move forward with an even greater emphasis on creating innovative businesses that deliver sustainable, profitable growth over the long term.”
He added, “We have a solid financial foundation. We understand the measurements and criteria that the public markets demand. idealab! companies are based on great ideas, sound business models and will endure as they create value for our employees and investors. When the time is right, we will return to the public markets.”
In an interview with The Wall Street Journal, Gross further explained that the pre-IPO quiet period was preventing idealab! from defending its track record just when investors are demanding information about its strategy and investments.
The incubator has already brought a number of companies public, including eToys, GoTo.com, Ticketmaster Online-Citysearch and NetZero. The company said its mission is to identify, create and operate category-leading businesses that use two-way communications — including the Internet, wireless and cellular. One such company is Open Sales, which has created, and supports, an open source e-commerce platform.
But incubators have been hard hit by investor skepticism since the dot-com shakeout began in April. Internet Capital Group Inc. and CMGI Inc. — both public incubators that had been valued at about $30 billion (far more than idealab! which was valued at about $7.88 billion) have since seen their value crumble to about $2.36 billion and $4 billion respectively as of Wednesday’s close.