Since the IPO flurry back in ’99 and early 2000, the phrase “going public” has only been trotted out in this industry as the punchline to a joke. So it came as some surprise to industry watchers early this year when a series of IPOs were announced, among them Rosetta Genomics, NimbleGen, and Helicos BioSciences.
That the IPO window is once again open is a good sign in a field that has been bouncing back for the past several years — but the flurry of market activity isn’t good news to everybody. The series of small public offerings could actually reduce the chance for future IPOs, experts say.
“If they’re not successful, it kind of closes the window on the IPO market,” says Reena Aggarwal, a Georgetown business school faculty member and an expert on IPOs. “If you’re talking about $50 million or $100 million, that’s a small IPO,” she adds. Rosetta’s IPO took in $26.2 million (“that’s very small,” Aggarwal says) and NimbleGen says it’s looking to raise about $75 million when its IPO occurs. A series of such small initial offerings could actually be enough to scare investors away from future IPO possibilities in the field, she notes.
The problem is that these kinds of public offerings don’t impress investors as safe bets. “IPOs in general are risky; smaller IPOs are much riskier; and biotech adds its own riskiness,” Aggarwal says.
Bottom line: if you were planning to retire rich off your startup company’s IPO, it’s probably time to dust off that plan B.