Get All Access for $5/mo

IPO Resurgence: Good News for Cash-Hungry Small Businesses

By Carol Tice Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

It was a long, lonely year for the initial public offering market in 2009. Week after week went by with no new issues pricing...or only weird holding companies or major corporations based in China hitting the American public markets. Just 177 issues priced worldwide last year, compared with 554 IPOs in 2007.

But at last, the IPO doldrums seem to be ending. Data from Renaissance Capital's IPOHome shows seven IPOs priced in January, up from a big none in January 2009. There have been 13 new IPO filings this first month, up from two in the same period last year.

Why should you care? The IPO upswing is good news for lots of small businesses that are looking for money--and not just the ones thinking IPO.

Why? Because IPOs are such a popular form of cash-out for venture capitalists. The lack of IPOs meant fewer lucrative exits, and contributed to a record low in VC investments in small businesses last year with only about $17.7 billion, the lowest figure in a decade. Even 2008 saw nearly $28 billion in VC investment, data from the PricewaterhouseCoopers/National Venture Capital Association/Moneytree study showed. With the restart of IPOs as a possible exit strategy for investors, we should hopefully see venture capital flows rise again in 2010.

Last week, insurer Symetra Financial went public, among others. Coming this week are the planned IPOs of five U.S. companies in a variety of industries:

Bigger companies trying the IPO route this week include FriendFinder Networks, which offers adult social networking, investment bank Imperial Capital, and drug-development firm Ironwood Pharmaceuticals. The appearance of smaller businesses in the IPO markets again is a big change that will hopefully help encourage more venture-capital investment in 2010.

One other factor that may help prime the IPO market this year--the companies that did go public last year saw their stock soar. Renaissance's IPO Index rose nearly 55 percent in 2009, results that should encourage stock investors to take a flier on new IPOs and strengthen this year's market.

With any luck, the IPO recovery will translate into growth in other forms of funding for small businesses in the coming year.

Are you interested in taking your company public? Or finding venture capital? If so, how do you assess the market today? Leave a comment and share your point of view.

Carol Tice

Owner of Make a Living Writing

Longtime Seattle business writer Carol Tice has written for Entrepreneur, Forbes, Delta Sky and many more. She writes the award-winning Make a Living Writing blog. Her new ebook for Oberlo is Crowdfunding for Entrepreneurs.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Side Hustle He Started in His College Apartment Turned Into a $70,000-a-Month Income Stream — Then Earned Nearly $2 Million Last Year

Kyle Morrand and his college roommates loved playing retro video games — and the pastime would help launch his career.

Business News

Homeowners in These 10 States Pay the Most in 'Hidden' Upkeep Costs

Hidden home costs pile on top of mortgage payments.

Growing a Business

5 Books to Help You Motivate, Unify and Build Perspective

In a post-Covid world, check out these must-read books to help build a more resilient organization, create a modern work culture and maintain a powerful growth mindset.

Money & Finance

Avoid These 10 Mistakes Entrepreneurs Make with Money

Despite the challenging statistic that only 5% of startups survive beyond five years, common financial pitfalls often contribute to their failure. Through personal observation, I've identified the prevalent financial mistakes made by entrepreneurs.

Growing a Business

How Visionary Leaders Transform Curiosity Into Groundbreaking Ideas

Lee Brian Schrager, founder of the South Beach Wine & Food Festival, discusses the spark that launched FoodieCon, his best practices for running popular food events, and why all business owners need to adapt to social media trends.

Making a Change

Learn All of Rosetta Stone's Languages for $152

A lifetime subscription is nearly $250 off for a limited time.