Google's public offering statement reads like part financial document, part populist manifesto, emphasizing the Web search engine company's intention to stay true to long-term values, not just short-term profits. Equally unusual is the company's decision to sell shares to investors through a public auction.
But while Google's stated goals and the auction process may be intriguing to investors, many analysts say that Google -- with its offbeat corporate culture and financial clout -- is unlikely to provide a blueprint for going public for other start-up firms. In addition, many venture capitalists said they did not expect, or even want, Google to inspire a spate of new public offerings if new firms are not yet ready.
"The last thing we want is a repeat of 1999 or 2000," said Mark Heesen, president of the National Venture Capital Association.
Going forward, "we hope every venture deal will stand on its own," Heesen said, asserting that if immature companies are hoping to ride Google's coattails, they are destined to fail.
"We don't want venture capitalists putting out companies too fast," he said.
A spate of public offerings could once again create sizable fortunes for venture capitalists and their limited partners. But for many Silicon Valley investors, the promise of Google aside, the dotcom bust is still a fresh memory.
Even so, the market for initial public offerings is reviving. In the first quarter of the year, there were 13 public offerings of companies backed by venture capitalists, according to the National Venture Capital Association. Heesen said there are currently some 80 venture-backed companies in registration to go public with the Securities and Exchange Commission.
By contrast, there was just one public offering of a venture-backed business in the first quarter of last year, and only 29 in all of last year. At the height of the boom, the number of venture-backed offerings hit 245 in 1999 and 215 in 2000.
Many companies that went public during that era were neither profitable nor based on a particularly sound business model. But Google, Wall Street analysts said, is in excellent financial shape, having posted a US$105.6 million profit last year on sales of US$961.9 million.
Jim Breyer, a partner at Accel Partners, a venture capital firm in Palo Alto, California, that invests in technology companies, said companies need not necessarily have Google's level of return to go public. But he said he was telling start-up companies they should show a profit and have US$15 million to US$20 million in sales each quarter before they seek public investors.
For less mature companies, he said, Google's offering does not herald a return to the dot-com days.
"We simply have to be very careful not to react to singular events like the Google IPO," Breyer said.
At the same time, some Wall Street analysts said, the Google public offering could spark new interest in Internet stocks on the part of small investors who were scared off by the bust.
"The biggest result is it could bring back to life the individual investor," Paul Bard, an analyst with Renaissance Capital, said of the Google offering. And renewed interest from individuals, including day traders, Bard said, could well increase appetites for more public offerings of start-ups.
Google, based in Mountain View, California, appears to be going out of its way to cater to the small investor. The company said it planned to sell its shares in a five-stage auction, overseen by its bankers Morgan Stanley and Credit Suisse First Boston. The auction concept is not new, but the scale of the Google effort -- which is intended to raise about US$2.7 billion -- is unprecedented, said Jeff Stacey, managing director of IPO Monitor, a Web site that tracks initial public offerings.
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