Investors Leary of IPO Riches-to-Rags Scenarios
Venture-backed companies get a lot of attention when they go public -- especially if there are big first-day gains. But in the first few quarters after an IPO, financial writers have a habit of forgetting they exist. Apparently, we’ve been missing out on some serious riches-to-rags stories. That was a takeaway from a panel of institutional investors and an exchange head speaking at this week’s National Venture Capital Association Conference in Silicon Valley. “The number of companies that miss their first, second, or third quarter out is remarkably high, much higher than we think it should be,” says Duncan Niederauer, CEO of NYSE EuroNext. Such earnings misses create problems for VCs as well as institutional investors, he noted, given that venture backers commonly hang on to their stakes a couple years after an IPO.
