The two IPOs that garnered the most interest from VCs this summer weren’t venture backed. Ethanol producers Verasun Energy (NYSE: VSN) and Aventine Renewable Energy Holdings (NYSE: AVR), both of which went public this June, have been the bellwethers of a burgeoning industry. Ethanol has attracted attention from VCs such as Vinod Khosla, who backed Cilion in a $160 million investment round in September, and Kleiner Perkins Caufield & Byers, which participated in a $120 million round for Altra.
But the VCs who have big bets riding on ethanol can’t be too optimistic after watching the IPOs of Aventine and Verasun. Aventine is trading below $24 after pricing at $43, while Verasun is trading at $18—$5 below its offering price.
The poor stock performance should worry U.S. BioEnergy, which filed to raise $300 million through a Nasdaq offering this August. The company lost $1.3 million on $6 million in sales during the first quarter of 2006.
New energy companies aren’t the only ones under performing. Medical device companies haven’t done any better. All four of the med device makers on VCJ’s Aftermarket list were trading below their offering prices last week. Northstar Neuroscience (Nasdaq: NSTR) opened at $15 on May 5, and was trading below $13.40 a share last month; Viscusi (Nasdaq: EICU) opened at $16 on April 4 and was down to just over $9.47; Iomai Corp. (Nasdaq: IOMI) opened at $7 on Feb. 1 and was down to $4.13; and Cardica Inc. (Nasdaq: CRDC) opened at $10 on Feb. 2 and was down to $4.39 last month.
Still, VCs remain optimistic. Among the companies they plan to take public are photo-sharing site Shutterfly and video compression software company DivX. We’ll keep you posted on how they do. —Alexander Haislip