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Online IPOs tap interest
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April 14, 1997: 8:22 p.m. ET
California firm launches direct public offering to small investors
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NEW YORK (CNNfn) - For investors who have always wanted a piece of an initial public offering but found it impossible to compete for shares with high-end market players, a year-old consulting company might have the answer.
California-based DirectIPO is promoting opportunities on the Internet for small investors to buy a stake in IPO-grade companies that will eventually make it to the Nasdaq Stock Market. It's what DirectIPO President Mark Perlmutter describes as an online venture capital firm that targets investors long overlooked by brokerages in mainstream IPOs.
"We seek to allow certain companies to use the Internet to raise capital from investors who understand their business," Perlmutter told CNNfn's Digital Jam Monday.
DirectIPO recently took on its first direct public offering project, selecting the Web design firm Digital Planet from a list of 300 prospective deals. Perlmutter says he and a board of entrepreneur advisers did not settle on Digital Planet until they were certain the firm had potential for strong profits generated by a solid management team. (292K WAV) or (292KAIFF)
Launching an online IPO is hardly commonplace. Yet Perlmutter argues that as investors become comfortable with the Internet and recognize that it is indeed possible to make money without the presence of a Wall Street underwriter, there will be more and more such moves by companies.
"Our model is similar to direct mail," Perlmutter said. "When an investor seeks out something from a discount broker, they initiate their own interest. They look for something they are familiar with. We think there are a lot of investors who would like to invest in Internet companies when they go public but don't have the opportunity because they are small investors.
"This is really a chance to get in on the last round of venture capital."
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