Term Sheet

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Marin Software may have lost some value

March 12, 2013: 1:14 PM ET

marinDigital ad company sets IPO terms below its recent venture capital valuations.

FORTUNE -- If Marin Software prices its IPO in the middle of the $11-$13 per share price range it set yesterday, the offering would represent a markdown for venture capitalists who plugged nearly $55 million into the company last year.

Marin, a San Francisco-based provider of digital ad management solutions, reports that it raised $20 million last November in a Series F-1 round that was priced at $13.53 per share. It also raised $34.5 million last January at a price of nearly $12.30 per share. Investors in both rounds included Temasek Capital, Benchmark Capital, DAG Ventures and Crosslink Ventures. Focus Ventures only participated in the Series F-1.

Moreover, as part of the Series F, the venture capitalists redeemed $3 million worth of common stock held by Marin co-founder and CEO Christopher Lien.

Now, to be clear, all of the VCs except for Temasek have shares previously acquired at lower prices. For example, the Series E round (March 2011) was at $9.19 per share and the Series D (May 2010) was at $5.53 per share. And an IPO rarely represents an exit for VCs, who usually liquidate their positions slowly over time.

MORE: Marin Software files for IPO

But clearly something unexpected happened in the past four months – at least in the sense of VCs misjudging how public market investors would respond to the company. Unless this is an artificially low price range designed to set up a big bump story...

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About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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