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Tech companies shelve IPOs

Venture capitalists are less confident thanks to volatile markets, but the IPO chill probably won't last that long.

Jeremy Hobson: If the Fed does announce some new stimulus today, it may give companies a little confidence about going public. This month alone, as the economy has stalled, at least 17 tech firms have put off initial public offerings.

Marketplace’s Jennifer Collins reports.


Jennifer Collins: Venture capitalists pour billions into startups every year. Facebook, Twitter, Groupon — all got healthy doses of venture capital. And eventually those investors want their money back.

Kathy Smith: So they’re anxious because they would like to get a good price for not such a long holding period.

Kathy Smith is with Renaissance Capital. She says when IPOs slow down — because the markets are unpredictable as they are now — it takes investors longer to cash out. Vikram Mansharamani teaches finance at Yale.

Vikram Mansharamani: Venture capitalists harvest their investments and then recycle that capital into new investments.

Mansharamani says if a venture capital firm doesn’t turn a profit, it won’t spend as freely.

Mansharamani: It’ll be hard for other startups to get money.

Kathy Smith thinks the IPO market could be slow for at least several weeks. An even if the chill becomes a deep freeze, she says it’ll probably only last six months.

I’m Jennifer Collins for Marketplace.

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