Venture capital group pushes for IPO help

Hoping to revive the dormant market for initial public offerings, the National Venture Capital Association today rolled out a set of recommendations -- from changes within the industry to government tax breaks and regulatory relief -- to help companies go public.

Venture investors, meeting at the Westin Boston Waterfront Hotel for the association's annual meeting, said firms that bankroll high-tech, life sciences, and clean energy startups need to encourage a broader "ecosystem" of investment banks, analysts, and other service providers that will work on the IPOs of smaller companies. Many venture-backed IPOs are too small to interest big investment banks.

At the same time, the association said, venture firms need to move more aggressively to combine smaller companies working on similar technologies into larger companies that can go public.

The association also called for government tax incentives, including an increase in the holding rate for capital gains status from one year to two or three years, and for regulatory changes that would help smaller companies avoid the complex internal controls mandated by the Sarbanes Oxley Act and other federal laws.

Together, such actions by industry leaders and government can help spur a new wave of IPOs, association leaders said during a roundtable discussion with reporters.

"Job creation and the health and vitality of our industry depends on our ability to achieve healthy exits," said Dixon Doll, chairman of the venture group and co-founder and general partner at the DCM venture capital firm in Menlo Park, Calif. "Exits" is the industry's term for IPOs or acquisitions, the two paths that enable backers of startup companies to profitably recoup their investments.

Doll and other venture capitalists bemoaned the near absence of IPOs since the economic downturn began last year.

There were no public offerings of venture-backed companies in 2008, and only one so far this year, online college Bridgepoint Education Inc., based in San Francisco. While IPOs accounted for 56 percent of exits in the 1990s, they have made up only 13 percent during this decade. Doll said a healthy number of IPOs would be at least 150 a year, similar to the number of offerings in the 1990s.
(By Robert Weisman, Globe staff)