Just when you didn't need another indicator of how depressed a year 2002 was, along comes new data from Thomson Venture Economics (TVE) and the National Venture Capital Association (NVCA) that tallies the initial public offerings (IPOs) for venture-backed companies.

Twenty-two venture-backed IPOs raised $1.9 billion in the U.S. during 2002, compared to 35 companies that raised $2.8 billion in the public markets during the prior year, according to TVE and the NVCA. The bad news: Not a single one of those 22 IPOs came from the telecommunications or networking sectors.

Table 1: Analysis of Recent Years' IPOs

Some larger companies with no venture backing hopped into the IPO pool. China Telecommunications Corp. (NYSE: CHA) raised $1.4 billion in the U.S. public markets after trimming its offering size by half (see China Telecom IPO Lacks Sizzle). Venture-backed service provider Cogent Communications Group Inc. (Amex: COI) became a publicly held company this year, but did so by purchasing publicly held Allied Riser Communications Corp. and changing that company's stock symbol (see Cogent Cops Allied Riser).

In the first three quarters of 2002, more than 80 percent of the venture capital invested in telecom companies went to later stage or expansion rounds, according to data pulled from the latest MoneyTree survey. At one time, lots of late-stage financings tended to signal that a crop of companies was about to go public. In a tough economy, however, such financing doesn't necessarily do much more than keep the doors open a little longer.

"I think that telecom IPOs are going to continue to suffer from news of [network] overcapacity," says Jesse Reyes, a VP at TVE."Overall, the industry has been tainted with the stigma of failed telecom [companies]. Because of that, we will more likely see more mergers than IPOs."

— Phil Harvey, Senior Editor, Light Reading
www.lightreading.com