Last year was brutal for dot-coms.
For many that elected to go public, the battering was relentless, driving some promising early players into bankruptcy.
With its dot-com community much younger than those in more established tech areas such as Washington and San Francisco, Richmond's IPO scene was almost nonexistent.
Were the local companies lucky for missing the rush to go public? Are the local tech or dot-com firms in a better position to survive because they aren't now being lashed by investors?
One company with Richmond origins, WILink plc., did go public in 2000 - in England. The company, which is listed on the Alternative Investment Market of the London Stock Exchange, offers links to investment information such as corporate annual reports through 130 newspapers and Web sites.
In the Wall Street Journal, for example, a corporate client of WILink will have a small "club" symbol next to its ticker in the daily stock tables. The symbol means WILink provides investor information about that company through the Journal's Web site.
After its July IPO, the company shifted its headquarters from Richmond to London. The World Investor Link Inc. subsidiary remains here, where it employs 71 and operates its online financial information service.
It has reported increasing profits for three straight years between 1997 and 1999, and reported a profit of about 1 million pounds for the first half of 2000.
In a recent interview with The Times-Dispatch, WILink.com Chairman Peter Wakeham discussed his company's decision to go public.
Q: Was it always your company's ambition to go public?
A. Not when first founded in 1989, but from 1996 onward we treated it as a serious option. At that time, we set up a plan to enable our senior managers to acquire shares in the company and followed up in 1998 with a Share Option Plan for all employees. We have always believed strongly that employee share ownership is central to alignment of employee and shareholder interests.
Q. Why was going public a better option than another exit strategy, such as a merger or acquisition?
A. We wanted to raise some cash, but primarily wanted quoted equity to allow us to make acquisitions. We wanted to stay in control of our destiny since we never found a trade buyer or merger partner that we felt could execute our vision better than ourselves.
Q. What has the experience been like?
A. It's early days yet but, thus far, the benefits outweigh the disadvantages. On the plus front, we are finding it easier to attract additional management talent and we are able to look seriously at acquisitions. On the negative side, we have had to take some stick on the share price as dot-com stocks have been ravaged.
Q. Do you have to "swim against the current" to let investors, who may group you with struggling dot-coms, know you are profitable?
A. Our share price has suffered, but not as greatly as other dot-com stocks, so, despite the decline, when looking at acquisition targets we are relatively better off now than a few months ago. Nevertheless, we do know that many investors are unwilling to consider any dot-com stock, regardless of its fundamentals.
I think investor sentiment will gradually become more balanced and dot-com companies will be evaluated on the strength of their business model and the strategic basics of market attractiveness and competitive position. I am confident that investors will ultimately appreciate us for our vision and for being profitable, cash generative and enjoying a strong balance sheet with good cash resources.
Q. Do you think Richmond dot-com companies should consider themselves fortunate for not attempting an IPO in 2000?
A. The thesis is an interesting one and to test it you have to look at a number of elements:
One: reasons for listing.
Companies who listed in the first six months would have raised cash for less equity than would be possible today. We raised 12 million pounds [sterling] at 10 pence per share. Today we would be forced to issue well over twice as much equity to raise the same amount of cash.
Acquisitions? If everyone has declined 80 percent, nothing has changed; you can still do a deal. Many acquisitions in early 2000 took account of the high values at the time. If you overpay with overvalued stock, then what is the problem was the thinking at the time.
Two: lost opportunity.
By not listing, what have you missed out on? Despite our share price decline we have still been able to progress a number of initiatives that would not have been possible while still private.
Three: Future expectations.
Does anyone think early 2000 values will return? I personally do not, but if you do, then obviously it's better to wait and list at some future date.
For technology, media [and] telecommunications companies I doubt this is the case. By contrast, the so-called 'old economy' businesses, which might have been seriously undervalued in an early 2000 IPO, are now enjoying improved valuations.