While IPOs might be a tough bet for the rest of the year, venture capitalists
still are optimistic. They continue to pour huge amounts of money into
high-growth companies. And, as seen with the recent public offerings of
companies like Zillow (NYSE: Z ), HomeAway (NASDAQ: AWAY ) and LinkedIn (NYSE:
LNKD ), it still looks like investors are interested in next-generation
dot-coms. So what companies are VCs looking at? One interesting example is
GrubHub, which raised $50 million in a new funding. The investors include
Lightspeed Ventures, Mesirow Financial, Benchmark Capital, Greenspring
Associates and DAG Ventures. GrubHub got its start back in 2007. The founders
met while at Apartments.com but got the entrepreneurial itch. Basically, they
saw an opportunity to transform the restaurant business. GrubHub would make it
extremely easy to order food online, then have it delivered. The service would
be free to users, but companies would be required to pay a commission for each
lead. So how is GrubHub doing? Well, it is hard to tell. But so far, the company
has relationships with 15,000 restaurants, with an emphasis primarily on major
cities such as New York, San Francisco, Philadelphia and Los Angeles. What's
more, GrubHub is using its financial heft to expand via acquisitions. The most
recent deal the company made was for Dotmenu, which has an online restaurant
service for campuses. As for an online-based food IPO, GrubHub can point to the
success of OpenTable (NASDAQ: OPEN ), the restaurant reservation network. Even
though the company has seen a drop in its stock, the valuation still is at a
hefty $1.1 billion, or 60 times earnings. Yes, these kinds of metrics should get
VCs excited. Still, in light of the difficulties in the IPO market, GrubHub
probably will not unveil an offering until well into 2012. Tom Taulli is the
author of "All About Short Selling" and "All About Commodities." You can
also find him at Twitter account @ttaulli. He does not own a position in any of
the stocks named here.
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