Venture-backed IPO activity remained low in the second quarter of 2003 with only two companies raising $164 million total, as lackluster corporate IT spending reduced companies' ability to achieve revenue growth and profitability. While IPO volume was low, the few companies that did go public were rewarded with stock prices above their offering prices. The pipeline shows six more venture-backed companies preparing to file IPOs after the close of the second quarter.

1. Emily Mendell, The Weiser Group for NVCA, 610-359-9609, emendell@weisergroup.com
Joshua Radler, Thomson Venture Economics, 973-353-7139, joshua.radler@tfn.com
VENTURE-BACKED IPO MARKET ACTIVITY CONTINUES TO LAG CONSIDERABLY
AMIDST LACKLUSTER CORPORATE INFORMATION TECHNOLOGY SPENDING
Newark, NJ- July 1, 2003—Two venture-backed companies completed Initial Public Offerings (IPOs)
worth $164 million in the second quarter of 2003, according to Thomson Venture Economics and the
National Venture Capital Association. As in the first quarter of this year, the overall IPO market window
remained extremely narrow with only five total companies going public in the second quarter.
“Corporate information technology and other capital expenditures are way off and that affects a young
company’s ability to achieve revenue traction and subsequently profits, ” said John S. Taylor, Vice
President of Research at the National Venture Capital Association. “With the public markets becoming
increasingly demanding for proven track records, it is a rare company that can meet these tougher financial
criteria in the current environment.”
iPayment, Inc., whose investors include First Avenue Partners and Randolph Street Partners, raised $80
million, while FormFactor, Inc., backed by Institutional Venture Partners and Mohr Davidow Ventures,
raised $84 million in the second quarter. While the total number of venture-backed IPOs in 2003 has been
low, the companies that have gone public have been rewarded with strong post-offering market values. All
three of the venture-backed companies that have issued IPOs this year are now trading above their offering
prices.
Analysis of Recent Quarters' IPOs
Total Avg.
Number Total Avg. Venture Venture
of Venture Venture Backed Backed
Venture Backed Backed Post Post
Backed Offering Offering Offering Offering
Quarter Number IPO's in Size Size Value Value
Ending of IPO's the U.S. ($Mill) ($Mill) ($Mill) ($Mill)
19 9 650.1 72.2 2,902.3 322.5
3/31/01
29 9 710.5 78.9 4,220.6 469.0
6/30/01
11 5 279.9 56.0 994.6 198.9
9/30/01
29 14 1,447.7 103.4 5,912.5 422.3
12/31/01
21 4 376.3 94.1 2,398.0 599.5
3/31/02
40 14 1,336.1 95.4 5,339.1 381.4
6/30/02
7 1 30.0 30.0 153.4 153.4
9/30/02
26 4 231.2 57.8 523.8 130.9
12/31/02
3 1 77.2 77.2 147.8 147.8
3/31/03
5 2 164.0 82.0 695.3 347.6
6/30/03

2. Although the first half of 2003 saw minimal IPO activity, the pipeline shows six venture-backed companies
“in registration” with the Securities and Exchange Commission. These companies have filed with the SEC
over the course of Q2 2003, and are now preparing for their public offerings.
Venture Economics Post-Venture Capital Index (PVCI) Annualized Return
as of 06/30/2003
Index Year to One Year Three Five Year Ten Year
Value Date Return Year Return Return
Return
432.87 34.1% 19.8% -29.8% -6.3% 6.1%
PVCI
974.50 10.8% -1.5% -12.5% -3.0% 8.0%
S&P
1622.80 21.5% 10.8% -25.8% -3.1% 8.7%
NASDAQ
8985.44 7.7% -2.8% -4.9% 0.1% 9.8%
DOW
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vitality of the U.S. and global economies, to stimulate the flow of equity capital to emerging growth
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at all levels of government, to maintain high professional standards, to facilitate networking opportunities,
and to provide research data and professional development for its members. For more information about the
NVCA, please visit www.nvca.org.
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