Pre-IPO grading & scoring methodology
Letter theory
A = high growth market, potential leader
B = more competitive market
C= 'public venture capital'
Applies mostly to the income statement
Scoring theory
Based in a Venture Capital ranking developed in the mid-90’s….click for more
Application:
C = no sales or running at a loss, score is usually 6 or below
C+ = visible top line revenue, usually profitable, score is usually 7
B or B- = strong historical internal growth, score is usually 7 or 8
Examples

TOP 5 of

Symbol

Offering

Price as of

Pct.

Pre-IPO

the last 101 IPOs

Price

3/31/2006

Change

Grade &

TOP 5 of the last 101 IPOs

Score

InterconExchng

ICE

$26.00

$69.05

166%

B, 8

Chipotle Mexican

CMG

$22.00

$55.39

152%

B-, 8

Under Armour

UARM

$13.00

$32.40

149%

C+, 7

Vistaprint Limited

VPRT

$12.00

$29.85

149%

C+, 7

Suntech Power

STP

$15.00

$36.99

147%

C+, 7

BOTTOM 5 of the last 101 IPOs

Cardica Inc

CRDC

$10.00

$7.87

-21%

C, 6

ScopusVideo Netwrks(1)

SCOP

$7.00

$5.15

-26%

C+, 7

Caribou Coffee (2)

CBOU

$14.00

$9.62

-31%

B-, 7

Traffic Com Inc

TRFC

$12.50

$8.35

-33%

C, 5

Avalon Pharmaceuticals

AVRX

$10.50

$5.05

-52%

C, 6

Note: the grading/scoring system doesn't work as well for mid-eastern companies

(1) Based in Israel

(2) Major shareholder is Arcapita (formerly First Islamic Investment Bank), whose investors

are located primarily in the Middle East, and makes its investments in a manner consistent

with the body of Islamic principles known as Shari’ah.

PRE-IPO SCORECARD DETAIL

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

Growth

mination

tary

rating

Top five

InterconExchng

ICE

2

2

3

1

8

Chipotle Mexican

CMG

3

2

2

1

8

Under Armour

UARM

2

2

2

1

7

Vistaprint Limited

VPRT

2

1

2

2

7

Suntech Power

STP

2

2

2

1

7

Botton five

Cardica (CRDC)

CRDC

2

2

1

1

6

Scopus Video(SCOP)

SCOP

2

3

1

1

7

Caribou Coffee CBOU

CBOU

2

2

2

1

7

Traffic.com (TRFC)

TRFC

1

1

2

1

5

Avalon Pharma (AVRX)

AVRX

2

2

0

2

6

PRE-IPO VALUATION RATIOS

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

TOP 5

Cap (mm)

Sales

Earnings

BookValue

TangibleBV

in IPO

InterconExchng (ICE)

$1,055

6.9

31.0

5.2

8.4

18%

Chipotle Mexican CMG

$618

1.0

33.1

1.5

1.6

24%

Under Armour (UARM)

$394

1.5

22.1

3.8

3.8

26%

VistaPrint (VPRT)

$397

4.35

-25

4.8

4.9

25%

Suntech Power (STP)

$1,740

3.5

87.0

6.1

6.2

18%

BOTTOM 5

Cardica (CRDC)

$123

180.7

-10.2

3.6

3.6

37%

Scopus Video(SCOP)

$144

3.3

-27.0

2.5

2.5

34%

Caribou Coffee CBOU

$316

1.69

-51

3.6

3.6

21%

Traffic.com (TRFC)

$222

1.7

-10.2

6.9

7.0

34%

Avalon Pharma (AVRX)

$92

n/a

-7.3

2.8

2.8

54%