Motion Chart of U.S. Venture Funded IPO’s from 1998-2008

Given the events of 2008, it seemed like now would be a good time to take a look at the U.S. IPO market for venture funded enterprises and see how it has fluctuated during the past 10 years. One of the most effective means to illustrate movement of this type is the motion chart option offered by Google. It provides a truly unique method of observing change over time.

The categories selected for this particular examination are City, Number of Companies, Amount Raised, and Total Valuation.

The data used to construct the charts is derived from the always useful Moneytree Report along with 2008 data from Hoovers IPO Central and pertinent corporate releases.

Regions assigned to each metropolitan area are designations that I have often used for my own personal items and are provided as a means to allow the user to readily identify all cities in each particular realm if so desired.

Feel free to adjust the tracking speed with the arrow next to the play button. I’ve also found that changing the ‘Lin’ setting to Logarithmic on both axes provides a much better visual perspective on the data. Individual metro areas can also be isolated either by clicking on the corresponding dot or checking any of them in the appropriate box on the right side of the form.

The high-water mark of 1999-2000 is readily apparent, as is the trough of the 2002-2003 post-bubble cycle. Confidence was restored to some degree beginning in 2004, but the number of offerings in the years up to the current date barely surpassed that set in 2000 alone.

How have things fared for venture funded companies during each quarter of the current year for all companies?

The enormous Visa event of Q1 appears much like the Sun set against a hobbled solar system.  Things regressed to the point where there is a solo orb remaining (Grand Canyon Education out of Phoenix) at the end of the year that is highly symbolic of the status of the current IPO market. In short, it tanked massively across all sectors.

Certainly an improved atmosphere for public offerings will return in due course, albeit perhaps in a form that may not approach even the middling numbers of the past few years for quite some time.  The question is whether or not many of the executives who might normally consider this route (particularly those in the high-technology field) even need to worry about going public when so many similar companies are being snapped up by massive entities who need to fill out a particular niche in their overall product stable.

Indeed, many leaders make it clear from the onset that their primary goal is to eventually have their venture funded organizations taken over as opposed to undergoing the process necessary to reach and put forth a successful public offering or sustain long-term operations as an independent entity.  Add to this the myriad of issues that must be addressed on a regular basis after the company becomes publicly traded and it’s not a surprise that many are leery to take that path.  Often it is much easier to seek partnerships with an IBM or HP, make certain they utilize your product as much as possible, and wait until representatives show up at your door with a bag full of cash and an acquisition offer. Frankly, in many cases, it’s an approach that is hard to argue against.