ABSTRACT

Initial Public Offerings (IPOs) were the most popular form to raise new capital in the United States during the last decade (1990-2000). Thousands of companies went public for the first time, particularly in the technology-heavy NASDAQ stock market. Along with the regular IPOs came to Internet IPOs backed by the venture-capitalists, who specialize in financing promising start-up companies and bringing them public. More than half of the Internet IPOs were backed by the venture-capitalists during 1996-2001. For example, in 1998 venture-capitalists put $13.7 billion into 2,023 start-ups, up from $2.5 billion invested in 627 companies in 1994. In 1999 alone, Internet companies received nearly $20 billion in venture capital funding. As a matter of fact, hardly there was a successful Internet IPO in that year that did not receive funding from at least one bigname venture capitalist.