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Skype Doesn’t Need To Float: One VC’s View

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“I don’t understand why they need to IPO,” Mike Chalfen, a partner with Advent Venture Partners, tells paidContent:UK, after Skype filed for a $100 million public flotation

“The company isn’t yet as profitable as it will be in a couple of years. If it was more fully maturing into its opportunity, then the shareholders would expect a higher price and sell more.

“The small size of the offering suggests that the shareholders are big believers — or don’t want to sell at the expected price. That’s positive for the stock but makes it rather mysterious as to why they’d bother floating now, for such a small raise relative to likely valuation.”

Advent has invested in Dailymotion, Qype and EchoVox. Chalfen, a former Apax partner who invested in King.com and QXL.com, tells us Skype’s IPO is not indicative of an up-turn

“The market remains unforgiving,” Chalfen says. “Intralinks and NXP have had a tough time. Smart has traded sideways. Qliktech has gone well.

There is no generally positive trend in the market. And Skype is too unusual a data point (large user base, ubiquitous brand, disrupting a trillion dollar industry) to generalise from.”

Chalfen reckons Skype will have to cut costs in the next few quarters, and thinks the current paid-to-free ratio (8.1 million of 124 million users) is small enough to mean a growth opportunity.