Tuesday, August 12, 2008

The drought is OVER ...

The drought has officially ended. While many of you may have thought I had been on vacation for months, a fugitive from the innovation law, still recovering from my Celtics winning the NBA championship or "gee another blogger who starts fast and fades like the French swimming relay team anchor" but I have been waiting to blog for a reason. My last blog was about little to no venture-backed IPO's in the US this year; so I thought I would wait and blog when the next IPO went to market. Hence, I waited, waited, and waited.



The wait is now over. Rackspace went public last week; the first venture backed IPO since Cardionet on March 19th; first technology IPO since Valentine's Day ish (sorry Hallmark).



So does this mean the flood of IPOS will begin now? Will the "pearly gates of liquidity" open freely? Some thoughts:



1. No



2. Rackspace is a company with size $300+MM in revenues and profits. It also has been around awhile and has a model of hardware and services that makes sense. Will it commoditized soon? maybe, but for now it's the best we got.



3. One of the uniqueness of my job at OCTANe is to hear "what is going on in the trenches and on the street" .. from hi-tech to biomedical to clean tech. Softness in consumer technology started mid last year, consumer oriented medical products within the first half of this year, clean tech? .. still sexy and getting money like women's based reality shows. (question is what will last?).



4. Early stage money is still not flowing in earnest, but you HAVE to consider this as an opportunity for asset allocation advantages now that the bloom is off real estate (my 2 cents .. another 12 months of real estate weakness for you investors).



5. Now for the good news, for you entrepreneurs and the community, innovation driven businesses that solve real problems are getting funded and I think, always will. During times of softness, focus on the science, the technology and develop value in the business. You can not predict or time the end game, just create value and ultimately you will be rewarded.



So, I am back to blogging on my semi-regular basis. Out.



Gary