By JASON BOOTH
Staff Reporter
IPO Monitor is trying to ride two waves to success the Internet and the stock market.
Started three years ago by four partners, the company provides subscribers with online information about the latest initial public offerings.
“We were tired of working for other people, and we were looking for ideas to catch the Internet craze,” said partner Jeff Stacey. “At the time, the IPO market was just starting to take off. We realized this was a good idea because all the information on IPOs was public, so we didn’t have to pay for it.”
IPO Monitor’s 2,000 or so subscribers pay $29 a month to log onto the company’s Web site and receive e-mailed bulletins containing IPO information. Its customers are mostly individual investors, stock brokers and investor relations firms.
“I use it all the time for research,” said Laurence Briggs, president of online stock brokerage Investin.com in Dallas. “Now if our customers ask for information on IPOs I tell them to look at IPO Monitor.”
The firm was launched by two couples with different but complementary skills. Jeff Stacey, formerly an electronic engineer at TRW Inc., designed the software while his wife, Kara Stacey, a graphic artist, created the Web site.
Tom Madden and his wife Deborah Munroe, who came from public relations and marketing backgrounds, focus on generating customers.
Jeff Stacey said revenues are expected to hit the $1 million mark this year, up from around $300,000 in 1998, and he notes that the company has been profitable since last year. Each couple invested about $20,000 at the initial stages, mostly for computers and other electronic equipment.
Despite this growth, the partners acknowledge that they are not making as much money as they did as employees of large companies. “But at least I have equity,” said Stacey. “My biggest fear right now is having to go back to a company that is not entrepreneurial.”
Until last August, IPO Monitor was run out of a “virtual office,” with Madden and Munroe operating out of their home in Calabasas, and the Staceys working out of their residence in Rancho Palos Verdes.
As the business grew, they opted for brick and mortar and took office space in the Century Boulevard corridor near Los Angeles International Airport. The location was chosen because it was both cheap and halfway between their two homes.
The venture has been helped, of course, by a surge in the number of companies going public over the past two years, particularly in the high-tech sector. At the same time, individual investors are increasingly active in the stock market via the Internet and are hungry for the latest news on public offerings.
The company also has benefited from a change in Securities and Exchange Commission policy. In 1996, the SEC mandated that all companies that are publicly traded or planning to go public file their financial statements electronically. As a result, IPO Monitor researchers can gather information about IPOs via the Internet, rather than having to visit SEC offices.
But there is competition.
Alert-IPO! was established last year by Torrance-based Ostman Inc., and Austin, Texas-based Hoover Inc. operates a service called IPO Central.
IPO Monitor has tried to stay ahead of the competition by expanding its services including more analysis to help investors judge what IPOs are strongest. Information on secondary offerings is also in the works.
Recently, the company has entered new markets through partnerships with other Internet vendors. It reached an agreement to provide IPO information to the New York-based financial news service The Street.com.
The partners also established an electronic wire service that will provide subscribers with corporate news, and they operate a service that designs and maintains investor-relations Web sites for corporate clients.
Obviously, the fortunes of IPO Monitor will be affected by the strength of the IPO market a market that has been fickle in recent months. But Tom Madden is confident that despite such fluctuations, business will remain strong for at least the next few years. The record-high levels of venture capital investments should see to that. “People always need money to fund good ideas,” he said.
Will IPO Monitor eventually be among those companies going public?
“We’ve had some people suggest that,” said Stacey. “But we are not there yet.”
IPO Monitor
Year Founded: 1996
Core Business: Providing subscribers with up-to-date information via the Internet on initial public offerings
Employees in 1996: 4
Employees in 1999: 7
Revenue in 1998: $300,000
Revenue in 1999 (projected): $1 million
Goal: To become the leading Internet source for information on IPOs
Driving Force: Growth in the number of individuals using the Internet to gather investment tips
