Convio IPO: Lost in the Noise?

Posted Apr 29th 2010 3:00PM by Tom Taulli
Filed under: Next Big Thing, Initial Public Offerings

It's been tough for small cap IPOs. Yet Convio (CNVO) was able to pull off an offering today. The company priced its deal at $9 per share, which was below the $10-$12 price range. And while the shares are up 12% in today's trading, investors should be cautious.

Convio develops on-demand software for nonprofit organizations, such as helping with raising funds and building relationships with donors, volunteers, alumni and so on. In all, the company serves 1,300 organizations and even handles 29 of the 50 largest charities.

There's little doubt that Convio is a big help to nonprofits. Keep in mind that the platform has helped to raise $920 million for worthy causes and has generated 3.8 billion emails.

And yes, Convio has been growing quickly. From 2005 to 2009, revenues went from $13.3 million to $63.1 million. The company gets subscription fees, which have terms of one to three years. There are also transaction fees.

Despite the success, there are some concerns. For example, the nonprofit market is highly price sensitive and have tight budgetary restraints. Next, Convio faces tough rivals that are moving to on-demand approaches.

But perhaps the biggest problem is that the company is still small. And as we've seen over the years, such IPOs tend to get lost in the noise and trade fairly lightly.

Tom Taulli advises on business tax preparation and is also the author of a variety of books, including The Complete M&A Handbook. His website is at Taulli.com.

Tags: cnvo, Convio, inthenews