InnerWorkings IPO Foretells Tech Mania

The debate continues over whether the strong IPO market this year speaks to a robust offering of tech start-ups or signals the kind of indiscriminate buying that lays the groundwork for a full-fledged stock mania.

For those fearing the latter, darker interpretation, there are clear signs that can serve as warnings: recent IPO candidates seeing their stocks soar despite fishy financials, companies dressing themselves up with last-minute deals to improve their bottom-line numbers, and executives exploiting every opportunity to take the money and run.

All of those signs seem to be present in InnerWorkings (INWK Quote), a Chicago-based "provider of print procurement solutions" founded in 2001 and backed by Silicon Valley venture-capital luminaries such as New Enterprise Associates and Benchmark Capital. The company was taken public last year with Morgan Stanley as the lead underwriter.

Last August, InnerWorkings sold 7 million shares at $9 each, but it was very coy about how it would use the money it was so keen on raising: Management "will have significant flexibility in applying our net proceeds of this offering," the prospectus read.

That kind of language is not designed to build investor confidence.

Coinciding with the IPO, insiders sold 3.5 million shares, 2.8 million of which were sold by InCorp, an entity largely controlled by Elizbeth Kramer Lefkofsky and Robert Heise that pulled down $25 million in the IPO.