Tech Companies Pursue IPO Gold (WSJ StartupJournal.com_

Technology companies that bleed red ink are once again lining up to go public -- and once again finding plenty of takers.

"Profitability is preferred, but we don't say that you have to be profitable to go public," Mr. McLeod says.

All of this is good news for financiers such as venture capitalists, who invest in private companies with the hope of a payout later if they go public or are sold at a profit. Venture capitalists have been unable to cash out of many investments in recent years because the IPO market has been largely moribund. Of 623 tech start-ups to which VCs gave initial financing in 2001, more than 50% remain closely held and independent, according to research firm VentureOne. (VentureOne is owned by Dow Jones & Co., which publishes this newspaper.) The huge backlog has crimped venture returns and caused hand-wringing across that industry.

"People weren't willing to trade off growth for profitability in 2004, but now the public markets are looking for growth again," says Kevin Fong, a partner at venture-capital firm Mayfield Fund in Menlo Park, Calif. "So things look pretty healthy" for venture capital.