Where have all the VC-backed IPOs gone?

Initial stock offerings priced at a brisk pace last week, in an end-of-year-rush to launch market debuts before much of Wall Street takes its traditional holiday break. But venture-backed startups had a modest role in a lineup dominated by an airline leasing spin-off and offshore drilling firm.

With few offerings expected to make it to market before end-of-year, the week capped a comparatively slow year for venture-backed IPOs. Just 37 venture-backed firms went public in the first three quarters of 2006, down from 39 in the same period a year ago, in what was also a slow climate for new offerings, according to Thomson Financial (publisher of PE Week) and the National Venture Capital Association.

IPG Photonics, a developer of high power fiber lasers and amplifiers, provided some cause of optimism among private equity investors. Shares of the company, whose backers include private equity investor Winston Partners and Merrill Lynch, jumped 55% in first-day trading Wednesday. The 9 million share offering priced at $16.50, a dollar above the expected range, raising $148 million for the Oxford, Mass.-based company.

Also on deck was Double-Take Software, a developer of data-protection applications expected to raise $82 million in a Friday offering. ABS Capital Partners, a mid- and late-stage investment fund with offices in Baltimore, Boston, and San Francisco owns a 55% stake in the software company.

U.S. venture capitalists complain that the high costs of Sarbanes Oxley compliance and weak market appetite for growth-stage companies are standing in the way of a broader IPO lineup. Speaking to a gathering of entrepreneurs earlier this month, National Venture Capital Association Vice President Stephane Dupont estimated that the costs of Sarbox compliance range from $1 million to $1.5 million a year once a company is public. Initial costs, he said, tend to be higher.

Robert Simon, director at Alta Partners, said that U.S. investors remain quite receptive to IPOs of mature companies with three-quarters-plus of predictable revenue and profits. Growth firms in certain sectors, particularly life sciences, Simon said, are finding a more receptive audience among European investors. —Joanna Glasner