Tech: The worst IPOs of 2011
The tech industry has produced some of the fastest growing companies on the planet, from Amazon.com in online retail to Google in Internet search. But is tech the best place to park your money when looking at initial public offerings?
Context & Ripple Effects
Two years after TechCrunch published its top-ten IPO candidates for 2010, the framing has flipped: instead of naming the most anticipated debuts, GeekWire is tallying the worst tech IPOs of 2011 and asking whether the sector deserves investor money at all. The piece sets the question against the industry's own benchmarks — Amazon in online retail, Google in search — companies whose public listings became the template for tech's premium.
First-order effects
- Investors who took allocations in 2011 tech IPOs are carrying losses on deals priced off the sector's Amazon-and-Google growth halo rather than current financials.
- Underwriters marketing tech deals for the rest of 2011 face buyers armed with this year's flops as evidence for demanding deeper discounts.
Second-order effects
- Companies still sitting on IPO-candidate lists of the kind TechCrunch was publishing in December 2009 face pressure to delay debuts or accept valuations below their private-market marks.
- Venture investors counting on public exits see the window narrow, stretching hold periods across their portfolios.
Third-order effects
- If weak 2011 debuts prove to be a pattern rather than a bad year, the market could bifurcate between profitable, later-stage companies going public and speculative names staying private longer — a structural test of whether tech's premium survives public-market discipline.
The trend: Tech IPO performance is decoupling from the sector's growth reputation, feeding a recurring debate over whether hype cycles or fundamentals set debut valuations.