Who says you need a business strategy to start a business? Just raise cash and take yourself public. Then figure the rest out later.
It's the new Internet strategy, based on at least one of next week's initial public offerings.
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Luminant Worldwide, a Dallas consulting company set to go public next week, plans to use the money it raises as a way to get its business off the ground.
Or, as Luminant puts it in its prospectus filed with the Securities and Exchange Commission: "We intend to receive the proceeds of this offering before making a preliminary business strategy." (In other words, "We'll get the cash first, and then figure out what we're going to do.")
Luminant's plan is to raise enough money through its IPO to acquire eight other Internet and e-commerce service companies. Only then will the company put together its business strategy and go out and try and make a profit.
Luminant itself was founded a little over a year ago with a hot-shot executive team led by former CBS chief executive Michael Jordan.
It wants to buy some fairly established firms, including Web software maker Align Solutions, online marketing venture Brand Dialogue, and the consulting company Multimedia Resources, and develop into a major provider of consulting services to large companies.
It's not a bad agenda overall, analysts say. Fortune 500 companies, in particular, are aggressively trying to ramp up Internet strategies, and the market for consulting services is strong.
But whether the public should be funding such a speculative venture is another issue -- and one that will recur in other upcoming offerings of very, very new companies.
"A lot of these companies are really venture capital deals that are going public and the public is funding them," said Lawrence York. "A majority of these Internet companies are not companies that [previously] would be able to go public."
Probably a year or so ago, a company like Luminant wouldn't even attempt such an early-stage IPO, opting instead to spend a few years building up its business, York said. Already, the company has reduced the size of its planned offering from 12.5 million to 5 million shares.
However, the company raised the expected price range, originally set at $11-13 per share, to $15-17. If all goes well, it will still raise $75-85 million.
In a lot of ways, the quick rush for IPO cash makes sense. In today's hyper-competitive and fast-moving market, companies feel they need a sizeable war chest to keep up.
That said, a handful of other Internet companies are set to launch IPOs next week.
One issue attracting attention is Opensite Technologies, which makes software that allows merchants and large corporations to develop and hold online auctions. The Durham, North Carolina company plans to raise about $40 million with an offering of about 3.7 million shares.
Analysts are also paying attention to Vitria, a company that specializes in software that large corporations use to track orders across the Web and perform other day-to-day operations, and NETsilicon, which makes embedded chips for networking providers.
On the e-commerce front, the biggest offering of the week is expected to be Garden.com, which publishes gardening information and sells gardening supplies over the Internet.
The IPO pace is expected to pick up even more towards the end of the month after a late-summer lull. Analysts expect investors will continue to behave as they have in recent months, favoring companies involved in Internet infrastructure businesses as longer-term buys, although good splashy brand-name companies will also do well.
But with more than 150 IPOs this year alone to choose from, analysts say investors are getting savvier.
"People are becoming a little more diligent in looking beyond the first layer," York said.
