Cracking Open the IPO Window for Pre-Commercial Device Companies

One can only shake one's head in admiration. In December 2004, Warburg Pincus bought two-thirds, or $14.5 million worth, of DexCom Inc. 's $22.5 million Series D round, paying an as-converted price of $5.38 per share [See Deal]. Barely five months later, the glucose monitoring company went public, raising $50 million at $12 a share [200530066]. Since the April 13th offering, shares have lost a bit—but in a generally dismal market, they're holding their own. Granted the shares continue to do so for the 180-day lock-up period, Warburg will have more than doubled its money in about a year.

A nice, but not terribly unusual story of VC timing? Perhaps. But DexCom had been struggling to raise capital before Warburg bought its shares, with a senior liquidation preference, at just slightly more than the price paid by the Series C investors (Canaan Partners, St. Paul Ventures, RWI Group and The Kaufmann Fund) two-and-a-half years before [See Deal]