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danahn

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Voyager Capital is a leading West Coast information technology venture firm that provides entrepreneurs with the resources, experience and connections to build successful companies. Voyager invests primarily in early stage, digital media, software and services, wireless and cleanIT companies, where the firm's domain expertise, and go to market and team building resources help build market leaders. Voyager Capital has offices in Seattle, Washington; Portland, Oregon; and Menlo Park, California.

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"More recently, watchers of the New York tech scene will recall Google’s purchase and shutdown of Dodge Ball."

Interesting... I wonder when Google went public... undoubtedly it was back in the heyday of small tech IPOs, otherwise they would have had to sell themselves!

Seriously though:

His other example, Wal-Mart - inflation adjusted would be >$100mm today at IPO.

To expand on hristov's list, some recent, smaller IPOs:

AcelRx: $85mm market cap (ie. post-money)

Kip's Bay Medical: $130mm market cap

Trunkbow International: $170mm market cap

Ossen Innovation: $87mm market cap

SGOCO: $80mm market cap

UniTek: $150mm market cap

through the midpoint of November. Some slightly larger ones as well that I've skipped.

Not to say that increased regulation and disclosure requirements have had a negligible chilling effect on the decision to go public, but this blows it out of proportion.

What may be a legitimate worry is that companies are choosing to stay private through sales to VCs and PE funds, saving millions in public company costs and the time that would otherwise be devoted to dealing with the general investing public. Whether this is a good or bad thing is debatable, but it does keep these companies out of reach for certain investors.

Following the numbers in that article here:

Say they're break-even on $70mm of annual revenue.

35% of annual revenue is gross profit - so of $70mm they keep $24.5mm - so say that's their operating expense number.

I think you'd have to expect a 3-5x bump in revenue (assuming gross margin stays the same and no significant growth in that operating expense number of $25mm) to justify buying at a $2bn valuation.

4x revenue growth from $250mm expected this year = $1bn revenue

$1bn revenue * 35% gross profit margin = $350mm gross profit. $350mm - $25mm operating expenses = $325mm pre-tax income. $325mm less 35% taxes = $210mm net income.

Assuming they can keep up a steady growth rate at this point and you can value Hulu at 15x their net income number, this implies a value of $3,150. Which is about a 15% annualized return number over 3 years off a valuation of $2bn today.

So some of the questions are - how much do you expect online TV to grow, what percent of that market do you think Hulu will have, and successful do you think Hulu Plus and any other initiatives will be, and do you think Hulu can keep their operating expenses relatively flat?