Social Web giants Facebook, Zynga, Groupon and LinkedIn have handsomely rewarded founders and early investors, but they’ve also raised a big question: Where are all the small initial public offerings? Conventional wisdom in recent years has been that if you can’t support at least a $500 million market value, the bankers don’t care about you and the mutual funds aren’t interested. Thus, you stay private.
We may want to hold off on writing the small IPO obituary just yet. So far this month, there have been 14 U.S. IPOs, with all but four of them debuting at below $500 million, according to Bloomberg data. Of the 10 small companies, nine of them are trading above their initial offer price, benefiting from an overall stock market rally.
Last week, Brightcove, a provider of cloud-based video-hosting and publishing services, went public at a valuation of $290 million. The stock is up 35 percent since then, valuing the company at $391 million. Greenway Medical Technologies has gained 43 percent since its IPO on Feb. 1, giving it a $407 million market value, while GSE Holding, manufacturer of containment products for environmental protection, is up 28 percent in two weeks on the market and is valued at $211 million.
Today saw another successful debut. Ceres, a developer of energy crops used in production of biofuels, jumped 14 percent, reaching a $344 million valuation.
The bigger companies, by comparison, aren’t faring so well. Two of them are below their offer price, and one is flat, with only gaming company Caesars Entertainment Corp. notching significant gains.
Clearly, this isn’t the late 1990s, but it’s also not 2009. Companies can go public, and they don’t have to be named Facebook.