Here come the hot IPOs of '08

SAN FRANCISCO (Fortune) -- Just because the U.S. economy might be looking at a recession, doesn't mean a few good tech IPOs can't light up the market. While no company is fully immune to economic retraction, the most promising technology companies have the advantage of a global marketplace in which to sell their wares. So if U.S. markets hit the skids, companies can always focus their efforts on Asian or European customers.

And in some ways, recession can help young companies focus their offerings. If 2007 was a good indicator, the kinds of private tech companies that will make it into the public markets this year feature either a technological innovation or a business model innovation that gives customers lower costs, more flexibility or both. So-called on-demand software companies like Success Factors (SFSF), K12 (LRN) and more recently NetSuite (N) managed to get out the IPO door on the back of their business model innovation (though not all have been great performers in the aftermarket). Open-source, more a technology movement than a technology innovation, is another category being welcomed by the Street, as is virtualization, the ability to have one computer essentially act like several.

And while there are tech companies in all these categories that hope to repeat the successful public market debuts of the class of 2007, they may face a higher bar in terms of financial health and heft that investors want to see. In general, after the bubble burst in 2001, companies needed about $100 million in revenue and $10 million net earnings to be an IPO candidate. Lately, though, private tech companies have been going public by simply showing revenue growth, ideally a lot of it, and scant profits haven't kept them from going public. But if things head dramatically south in the U.S. economy, expect earnings to be back on the table if a private company wants to tap the public markets.

Here are some IPO candidates to keep an eye on:

MySQL. One of the most anticipated tech IPOs of the coming year, MySQL is the leading open-source database company on the planet. Its software might not have the bells and whistles of Oracle 11, but it also comes at a much cheaper price. According to the venture capitalist lunch chatter, MySQL is expected to file very soon.

Ingres. From 30,000 feet Ingres looks like a competitor to MySQL, but actually focuses on another part of the database food chain that is more competitive with Oracle (ORCL, Fortune 500). Another open source company, it has the heft, approaching $100 million in revenue and is cash flow positive. It is widely expected to file for a public offering by mid-year.

SugarCRM. Yet another open-source company, it offers, as its name suggests, software for customer relationship management, things like sales force automation and customer support. It is also on-demand. Think of it as an open-source version of SalesForce.com (CRM). The word is that it is cash flow positive.

ExactTarget. A slew of software as a service companies got out the IPO door in 2007, and on-demand e-mail marketing company ExactTarget has filed with the SEC to join that group in early 2008. And get this: unlike some of its on-demand peers, it's profitable. For the first nine months of 2007, revenues came to $34.2 million, up from $22 million during the same period in 2006. Earnings in 2007 were $2.1 million. The comparison here is competitor Constant Contact (CTCT), which went public last October. And although Constant Contact got out first, the chatter about ExactTarget has been nothing but good.

Parallels (formerly SWsoft). The virtualization technology company has more than doubled revenues every year for the past eight years, so it's got the track record. And its products are giving VMware a run, especially in the small- and medium-business marketplace. Just find someone who uses Parallels and they will not stop gushing about it. Given VMware's successful IPO, you can bet the SWsoft executive team and their investors including Intel Capital, Bessemer Venture Partners and Insight Venture Partners are looking hard at their IPO options in 2008.