Facebook didn’t kill the tech IPO market after all.
Following the debut of ServiceNow at the end of June, Palo Alto Networks and Kayak Software are both scheduled to sell shares next week in offerings that are expected to raise more than a combined $310 million.
And we’re just getting started, according to Scott Cutler, co-head of U.S. listings at NYSE Euronext. While Facebook’s disappointing offering in May led to a brief lull in the market and hurt overall confidence in the IPO process, investors still want growth, and there are plenty of technology companies that fit the bill, he said.
Cutler estimates that in September and October, several billion dollars will be raised in IPOs, with tech accounting for a big percentage of that. Last year, those two months were a dead zone, as sluggish job growth and the debt ceiling fight weighed on the stock market. Ubiquiti Networks raised $106 million in the only offering during that stretch.
“Assuming the market stays the same as it is right now, it will be a very busy time,” Cutler said.
Navin Chaddha, a venture capitalist at Mayfield Fund, said the pipeline of IPOs has even more longevity. Around a half dozen companies in his firm’s portfolio could go public in the next 12 to 18 months as long as U.S. and European economies hold up, he predicted.
“We are bullish, pending what’s happening with Europe,” said Chaddha, whose Menlo Park, California-based firm announced today that it raised a $365 million fund. “People are looking for growth stocks. They’re looking for consistency in earnings.”
One Mayfield company that has announced plans to go public is residential solar provider SolarCity. The company is filing under the Jumpstart Our Business Startups (JOBS) Act, which means it can keep its plans confidential with the SEC until three weeks before starting its roadshow.
Because businesses with less than $1 billion in annual revenue can file under the JOBS Act, most of the companies that recently registered to go public aren’t known by the public, according to Cutler. But they’re lining up.
“You don’t see the whole quality of the pipeline,” he said.