It was the OTC Bulletin Board trading venue that Longport ascended to in 1994, having completed a private offering of shares the year before. In several ways, trading on the OTC Bulletin Board accounts for the success, past and future, of Longport.
"Being public and offering investors some form of liquidity or exit strategy played a big role in our ability to raise additional funds and commercialize our technology," says McGonigle. He estimates that Longport has raised an additional $4 million since the company's first offering in 1993. Some of this fund-raising has been plain vanilla, such as the sale of additional shares of common stock to new investors. Many companies are able to accomplish this because they price the common stock they are selling privately at a slight discount to the prevailing prices in the public market, thus enticing potential new investors with an immediate gain.
In addition, Longport has been able to enjoy a fairly robust valuation. With 17.5 million shares outstanding at a prevailing price of $3 per share, Longport is valued at more than $52 million--not bad for a development-stage company with four employees. And of course the stakes owned by Longport employees have made them wealthy, at least on paper, and perhaps someday for real.
Another benefit to Longport being public is that the company already has its exit strategy in place--meaning a way for investors and founders to cash out if the company succeeds. Many companies face the real risk of building a successful enterprise and then having the market melt down on them when they decide to go public, scuttling their dreams for public ownership. Companies that come very close to doing an IPO only to have the IPO window close on them may never be able to get back, even when market conditions improve. They're perceived as damaged goods. "The way we did it means that regardless of what the IPO window does, we're already public," says McGonigle. "If the company does well, we hope it causes the price of the stock and the value of the company to go up."