In the IPO Market, a Smaller Cast of Stars

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Some of the warning signs of a tech bubble have begun to reemerge, including a rush by banks and big institutions to buy into late stage tech companies expected to IPO. But as the NY Times reports, these firms look very different than their dot-com predecessors.

For starters, there are a lot less of them. Research from Morgan Stanley shows 308 companies went public in 1999, about fifty percent of the total public offerings for that year. By comparison just 20 tech firms went public in 2010, and many of the companies leading the charge in valuations these days are in no rush to IPO.

The twenty four biggest firms to hit the public markets back then totaled around $71 billion, a mark achieved by combining just five of the biggest tech firms today: Facebook, Zynga, Groupon, LinkedIn and Twitter.

The NY Times then runs through the standard set of arguments: the web is a real business now, with a much broader user base and real revenue. Just five percent of the world population was online in 1999, compared to one in three people today.

Certainly a lot of the activity by financial players is concentrated on a few companies. But it seems strange for the NY Times to draw an arbitrary line in measuring these five companies against the slate of 28 dot-com stars. Why not include firms like Demand Media, which recently went public with a billion dollar valuation, or Pandora, which is considering an IPO?

In the IPO Market, a Smaller Cast of Stars