TheCorporateCounsel.net

Only 42 venture-backed companies went public in the United States in 2016 – including eight incorporated outside the United States – making it the most challenging year by number of IPOs and by aggregate offering amount raised since the recessionary times of 2009. The average offering amount per IPO in 2016 was only $77.3 million—the lowest average since 2003.

Venture-backed IPOs in 2017 are on pace to surpass the levels reached in 2016, both in number of IPOs and aggregate offering amount raised. In the first six months of this year, 31 venture-backed companies have gone public in the United States, including seven incorporated outside the United States. And the Snap IPO in March raised $3.4 billion—nearly $70 million more than all venture-backed IPOs in 2016 combined. Here’s the latest “Venture-Backed IPO Survey” from Gunderson Dettmer, focusing on key governance & disclosure items.

Of the 34 venture-backed companies that the firm reviewed:

– All are incorporated in Delaware

– 52.9% listed on the Nasdaq Global Market, 32.4% listed on the Nasdaq Global Select Market, 11.8% on the Nasdaq Capital Market and 2.9% on the New York Stock Exchange

– Average time from incorporation to IPO was just over eight years

– Average time from initial registration statement submission to the SEC to pricing the IPO was nearly 8.5 months

– 30% included a directed share program component in the IPO

– Only seven of the companies completed follow-on offerings in 2016

Companies were also taking advantage of Jobs Act accommodations – 100% submitted a confidential registration statement & 88% provided two years of audited financials.

Voting Rights: CalPERS Wins “Dual-Class” Suit

Recently, CalPERS notched a win for investors in the battle over “dual-class” voting structures. The pension giant sued Interactive Corp last year when it attempted to create a new non-voting class of stock that would have given perpetual voting control to the board chair – despite the fact that he owned only 8% of outstanding economic rights.

After months of litigation, the company has abandoned its proposed issuance. Here’s an excerpt from this “Harvard Law” blog:

By shedding the light of litigation on IAC’s non-voting share plan, CalPERS achieved a significant victory for shareholders’ core right to vote. This result should make founders and controllers considering copying the trend of non-voting stock issuances think twice – as institutional investors will act decisively to defend and assert their right to vote when faced with these threats. Such protective actions will continue to promote open and responsive capital markets, and the long-term value creation that comes with them.

Tomorrow’s Webcast: “Controlled Companies – Trends & Unique Issues”

Tune in tomorrow for the webcast – “Controlled Companies: Trends & Unique Issues” – to hear Jane Freedman, Dorsey’s Cam Hoang and Davis Polk’s Sophia Hudson discuss the unique issues involved with controlled companies.

– Liz Dunshee