2013 IPO / Crowdfunding Market Forecast

2013 Crowdfunding / IPO Market Forecast

As the global economy continues to show signs of improvement, the market for Initial Public Offerings (IPO) is expected to jump by double digits in 2013.

IPOVillage.com and First Line Capital are expecting 15 to 17 percent growth in the number of NASDAQ IPO’s in 2013. The growth is being spurred by the JOBS Act – Jump-Start Our Business Start-Ups – and an improving economy.

We are seeing a steady increase in investors interested in IPOs at IPO Village. Now that investors are bringing cash to the table, businesses are going to find a way to get to the capital and put it to work.

First Line Capital is reporting an increase in interest of companies wanting to go public as well. First Line is in a rare position to see IPOs well before the public is aware of a company issuing stock for the first time. First Line is an investment banking consulting firm which guides companies through the IPO process to raise capital in the public markets. First Line is major force in the direct-to-public IPO marketplace.

First Line could not comment on deal specifics, but the number of deals in discussion is up and rising.

First Line recently partnered with IPO Village to provide support and consulting services to companies which need assistance in setting up their IPO. Because First Line is so intimately involved with the public IPO process, it begins working with companies months ahead of an IPO. Work begins up to a year before the company starts the SEC review process.

With 20 years of experience in helping small to large companies go public, First Line has an extensive network of corporations around the globe who have staged IPO’s. Their reputation is also attracting new companies to the IPO marketplace.


“The [JOBS] act … allows ‘emerging growth companies,’ with less than $1 billion in annual revenues to submit their documents to the SEC for confidential reviews and wait until 21 days before their IPO roadshow to make a public filing,” Wall Street Journal Senior Editor Emily Chasan reports in her blog.

Clearly, JOBS is going to have a significant and long lasting impact on the future of business and industry in the United States. Here at IPOVillage.com, we are already seeing an uptick in the queries about companies raising money through an IPO. We attribute this directly and indirectly to JOBS.


The JOBS Act has eliminated many of the barriers for small companies to go public. It’s just that simple.

“The Jumpstart Our Business Startups (JOBS) Act, passed by the U.S. Government in April, provides opportunity for small companies by easing regulations and allowing unaccredited investors to participate in ‘crowdfunding’ to raise capital,” wrote MSN Money reporter Trefis . “Small-to-midcap companies are usually reluctant to go public because they are discouraged by the legal, marketing and accounting costs involved, as well as the requirement to disclose quarterly financial and business information, which poses a competitive threat to their operations. The JOBS Act, however, considerably reduces the regulatory burden on emerging companies and makes it easier for them to go public.”

The idea that crowdfunding is the driving force behind new IPOs is being supported by others. Writing in Forbes, Devin Thorpe lists a number of reasons why crowdfunding is going to seriously take off in 2013.

By taking an IPO through a crowdfunding route, a small company accomplishes several things:

• It minimizes the expense of attorneys who charge hefty fees to guide an IPO.

• It sidesteps institutional investors who buy IPO stock at a discounted rate and turn around and sell it at a profit.

• It avoids the hyperbolic publicity buildup as seen when taking an IPO through underwriters and lets the public participate in pre-IPO pricing.


As the global economy gradually improves and the US market with it, smart business owners are looking at expanding their reach. To do that, they need capital and one of the best ways to do that is to sell stock.

Small business is the backbone of the nation, providing the bulk of jobs and re-investment into the economy. Anything that can help small business compete and perform better simply has to lead to a better economy. In the passage of the JOBS act, Congress recognizes this.

“Because of its critical importance to job creation and economic growth, the small business community is a prized constituency in Washington, D.C.,” wrote John Kinney for Baker-Donelson. “The JOBS Act could give small long term care companies an additional source of start-up funding and expansion at a time of market uncertainty.”

The JOBS act and crowdfunding as offered by IPOVillage and First Line Capital allow small and startup businesses to access capital they would otherwise not be able to reach.

“Crowdfunding enables small or start-up businesses that may not have access to traditional methods of capital financing to raise capital via the Internet and social media, typically from small-dollar investors,” write Nicole Jumper and Joel Buckberg for Baker-Donelson.


Because smaller companies are typically not going public with a big splash in the major markets, tracking them will have to wait until the SEC closes the IPO books for 2012.

However, IPO growth in 2012 slowed compared to 2011, according to Ernst and Young. The report “Sharp decline in global IPO deal value and volume” also suggests an upswing in 2013. Maria Pinelli, Global Strategic Growth Markets Leader at Ernst & Young, said in the release: “Several large IPO deals are expected by end of 2012 and the market continues to be opportunistic and selective. We expect more volume in first half of 2013. Industries to watch include technology, consumer products and industrials sectors.” The whole article may be read here.

The last time IPO rose by any significant extent was in 2010 according to the report “Global IPO Markets” by Forbes.

In 2009, Forbes counted 577 IPOs. In 2010, that number more than doubled to 1,393, an increase of 141 percent. 2011 showed a very slight decline to 1,225 and the numbers for 2012 are still coming in.

Renaissance Capital is tracking US-based IPOs. Through Oct. 26, they report 121 companies went public for the first time.

NASDAQ reported 86 IPOs since the beginning of the year as of Oct. 26. More were in the pipeline. Interestingly the NASDAQ reports also reports the worst IPO performances are dominated by tech and internet stocks. NASDAQ’s report is only for IPOs handled in that exchange.


While the JOBS Act is aimed at small and startup companies, taking an IPO through crowdfunding can be done by any size business. Even the Internet giant Twitter can go through crowdfunding to go public.

Interest in Crowdfunded IPOs Picking Up Speed

With recent Wall Street Initial Public Offering (IPO) blunders like Facebook, more and more companies are looking to take their IPO direct to the public. As the leader in the crowdfunding IPO business, IPOVillage.com has seen interest soar.

We have signed two IPO deals with businesses, both of which found us through the IPOVillage.com website. Because of Securities and Exchange Commission (SEC) rules, we’re not able to announce what these companies are right now. An announcement will be made as soon as we can.
Two more companies are in negotiations with us now to handle their IPO. Again, as soon as we’re allowed to, an announcement will be made.

This is exciting stuff.


Going direct to the public, sidestepping the costly and complicated Wall Street process, just makes good fiscal sense.

A traditional Wall Street-type IPO could cost a company as much as 10 percent of the total IPO investment. That’s money the company will never see. That’s investment dollars the company has lost. That’s capital which could have been used to buy more equipment, re-invest in the company and otherwise improve the business.

But, it’s gone forever.

Instead of handing over commissions, discounts and premiums to a syndicate of Underwriters, institutional investment bankers and lawyers, IPOVillage puts maximum money into the company.


The way things are going, 2013 will be a banner year for crowdfunding IPOs and IPOVillage.com .

Many, many more companies have expressed interest having IPO Village handle their upcoming IPOs. The website gets an increasing number of hits every weekly from companies interested in going public. We’re sending out information packages regularly.

Interest is heaviest from consumer product businesses and tech companies with a strong customer affinity and customer base. For these companies, IPOVillage makes sense. These businesses are built on loyal customers. Those customers, who built the company into what it is today, deserve to share in the success of the business.


By sending the IPO direct to the public, the business gives its loyal customers the chance to buy stock at the true IPO price. By going through IPOVillage.com , the buyers do not have to deal with brokers, stock advisers and analysts.

This crowdfunding means everyone saves money. Crowdfunding means everyone has a chance to share in the true profits.

Crowdfunding IPOs, as handled by IPOVillage.com , treats a business’ customers with respect, integrity and genuinely shows how much those customers are appreciated.


There’s no size limit for a company to go through IPOVillage. Global companies with thousands of employees across the planet can benefit from direct-to-the-public IPOs. But just like the business world that is mostly made of small companies, small companies are the majority of businesses approaching IPOVillage.

Small businesses don’t have the resources giant global corporations have. Because of this, if they take the traditional IPO route, they have to hire even more people to help navigate the process. That translates to even more money out of their pockets. That’s lost money.

The 2013 IPOs are on track to set a record.

If your business is looking for a way to raise capital for expansion and improvement and you’d like to reward your loyal customers, consider releasing stock through crowdfunding IPO. As an industry leader, IPOVillage.com has built its business by helping small and medium customers. Let us show you how 2013 can be the year your business soars.

Interested in learning if your business is a candidate to go public in 2013 utlizing the IPO Village Crowdfunded IPO Model? We are offering a FREE analysis from IPO VIllage and First Line Capital. Please contact us here.


IPO – Initial “Pricey” Offering; out of reach for small/mid-sized companies

When a company decides to conduct an Initial Public Offering (IPO) of stock, it is not making a cheap decision. The steps in the process, once the decision is made, cost money.

The underwriters are primarily involved with compliance issues, structuring the deal and pricing the new shares and later attempting to sell the stock. They get paid for this by getting a percentage, typically 8%-9% of the offering price.

Itʼs big money too.

Buckhorn Capital Investment reported in September, “the securities industry earned just under $6.6 billion in underwriting fees for both debt and equity.”

Thatʼs money that did not go to business operations through the IPO.

Add to this fact, the underwriting business is largely controlled by 10 firms. Merrill Lynch, Goldman Sachs and Lehman Brothers are the lead players.

IPO underwriter commissions and profits are therefore concentrated into a very few hands.

Investment bankers and underwriters can be the same. In the cases where they are identical, the profits go up even more and the income going directly to the IPO company is further reduced.

Consider the recent Facebook IPO as an example of how investment bankers can quickly make a ton of money on an IPO.

The Wall Street Journal reported on May 23, 2012 “Morgan Stanley and other underwriters have made a profit of about $100 million stabilizing Facebook Inc. stock since trading began on Friday, people familiar with the matter said.” The article further stated, “The bank would receive the money on top of millions of dollars in IPO fees, the people added.”

Because of the regulations involving an IPO and getting registered with a stock exchange, most companies hire attorneys. These firms have extensive experience in securities law and most are nearly as old as the New York Stock Exchange if not older.

Going right back to the Facebook IPO, Find Law reported on May 21, the social media paid $2.6 million to the law firm of Fenwick & West’s Silicon Valley office.

With each trade before an IPO stock reaches the public, the price has typically gone up to allow the seller to make a profit. This means the big investment banks and their giant-wallet institutional investors have bought the stock and sold it for a profit.

When the average person is able to buy the stock, they still have to go through a broker. Even trading only with very small trading fees can add up to serious money.

Again, more money that does not go into the coffers of the IPO business.

By the time the stock finally reaches the general public, the amount of money diverted from the IPO company into the hands of banks, traders and underwriters can be staggering, as much as 30 percent or more.

Putting a real value on those numbers, if an IPO sold stock worth $1,000 by the time the public could buy stock, the company would only have $700. In this case, $300 is a significant amount.

Ilan Moscovitz, senior analyst for the Motley Fool, reported the average markup in IPO stock from 1990 to 2009 was 22 percent amounting to $124 billion.

Think about what could happen if a company issued IPO stock direct to the public without any middlemen. In the first place, the company would get 100 percent of the money from investors. No commissions, no extra fees, no discounts. RThe company would get the money is needed.

Secondly, investors would pay the true value of the stock and not have to worry about add ons, fees and exorbitant commissions. Thirdly, the stranglehold the SEC and a handful of giant financial institutions have over the world of stocks and trading would be broken.

This would level the playing field in a true capitalistic form. There would be less government interference and far more “free market” rules governing the price of stocks.