Tech IPO Floodgates Opening?

After four or five years of almost non-existent activity (exceptions: Google and Vonage), the high-tech IPO is appears to be alive and well again judging by VMWare’s robust opening day performance (the stock nearly doubled from its offering price) and Classmates.com’s intention to raise $125-million.

To be honest, the timing is strange given the economic landscape is in the midst of a credit crunch and the capital markets have been, at best, volatile recently. Nevertheless, a growing number of intrepid high-tech companies are pushing forward with IPOs while Glam.com intends to stay private but wants to raise a staggering $200-million.

So why all this activity now? Why have tech companies suddenly come to the realization it’s time to go public? Maybe some of these companies and their investors (founders, venture capitalists) want some liquidity after spending years building their businesses. Maybe they believe their companies are big enough and ready enough for an IPO.

Classmates.com is an interesting proposition. The company has a well-known brand, 50 million registered users, $152.1-million of revenue in 2006 and it’s almost profitable – which looks like all the right ingredients for a successful IPO.

The question is whether the emergence of IPOs is a sign of a robust market or a bubble. After all, the beginning of the end of the dot-com boom was when not-ready-for-primetime companies were able to go public simply because overly-enthusiastic retail investors were happy to support the cause.

The tech landscape will be fine as long as the companies going public have good brand names, sustainable businesses, growing revenue and, hopefully, profits. If you start getting money-losing companies in competitive markets looking to do IPO, then we’re in for trouble.