[Posted on September 24, 2007 - 10:58 AM]
E-mail
del.icio.us
Technorati
DiggThe market for initial public offerings is "selectively strong," says Deborah Farrington, founding partner of StarVest PartnersLP.
One area of strength is on-demand software, also known as software-as-a-service, or SaaS. Farrington may soon find out if she's made the right bet in the on-demand sector when StarVest portfolio company NetSuite Inc. goes public. The firm, which makes on-demand enterprise resource planning and customer relationship management software, filed for a $75 million IPO in July.
NetSuite, which plans to go public using a Dutch auction, will be StarVest's first portfolio company to launch an IPO. The company has raised $100 million, with StarVest as the second-largest investor after Oracle Corp. chairman Larry Ellison, who owns 74% of NetSuite's stock.
SaaS is a hot investment sector, but the field is getting crowded. NetSuite faces plenty of competition, both from other on-demand business software firms, such as Salesforce.com Inc. and Sage Group plc, as well as traditional software developers such as Intuit Corp. and Microsoft Corp.
While understandably discreet during NetSuite's quiet period, Farrington points hopefully to the successful IPO of BladeLogic Inc., which makes on-demand software that helps enterprises manage their servers. The company's stock surged 47 % on its debut in late July.
Of course, nothing is certain this fall, as some tech companies ditch their IPO plans amid the current credit crunch. Citing "adverse market conditions," Merrill Corp., which uses the on-demand approach in some of its document management and litigation support services, last week pulled the plug on its plan to go public. - Mary Kathleen Flynn
See July 3 story on NetSuite on TheDeal.com
See July 26 story on BladeLogic on TheDeal.com
See Sept. 21 story on Merrill Corp. on TheDeal.com
