The initial-public-offering market for technology start-ups roared back to life last year -- bolstered by a buoyant stock market and a batch of companies that hankered to go public after waiting for two years.

The window proved to be small, though: The market slowed down again this year, and the only Silicon Valley IPO so far was a smallish $37 million offering by Threshold Pharmaceuticals of Redwood City. Another deterrent to IPOs, venture capitalists say, is the new Sarbanes-Oxley laws, to be implemented for public companies this year. Companies say compliance with the laws is costing millions of dollars.

In 2004, by contrast, 26 companies went public in the Bay Area, compared with only seven the year before, according to VentureOne. Five of them entered the ranks of the Silicon Valley's biggest 150 companies: search engine Google; Ultra Clean Holdings, which supplies equipment to chip manufacturers; and three chip companies, Atheros, Leadis and Sirf Technology.

Nationwide, IPOs tripled to 67 from 22.

Google set a record for a tech company: It raised $1.2 billion in its Aug. 19 offering, 10 times the size of the next-biggest IPO, for wireless semiconductor company Atheros.

There was talk that a host of other companies would try to ride Google's coattails. But Google's various stumbles -- from a controversial interview with Playboy magazine shortly before the IPO to an unexpected reduction in its offering price -- put a damper on any such effect, said Shopping.com CEO Daniel Ciporin. Shopping.com, a Brisbane comparison-shopping company, went public in October, two months after Google. ``Google was a phenomenon unto itself,'' Ciporin said.

The buzz surrounding Google's unusual auction-style offering overshadowed the other theme of the year: the bounty of IPOs by local health care companies.

More than half of Bay Area IPOs were health care companies, mostly biotech -- of which South San Francisco's Therevance, a developer of treatments for respiratory disease and bacterial infections, was the largest. Almost all of them are losing money, relying on the good faith of public investors that one day they'll earn a profit.

Sharon Weinbar, an investor at Bank of America Ventures, did better than most of her competitors last year -- in part because her firm dabbled in a number of sectors. Three local companies her firm has backed went public: medical-device company Vnus Medical, biotech company Dynavax and semiconductor company Monolithic Power Systems.

One factor driving the boomlet last year, she said, was a large number of healthy start-ups that had waited two years for public investors to warm up to IPOs. ``By the time the window opened, those companies were quite mature,'' she said.

Going forward, the biggest obstacle to more IPOs, she and other investors said, is the cost of complying with Sarbanes-Oxley rules. The rules lay out strict guidelines for public companies on everything from financial controls to accounting transparency. Implemented in the wake of management scandals at large corporations such as Enron and WorldCom, they are designed to discourage corporate fraud and protect individual investors.

Yet valley investors and entrepreneurs say an estimated average of about $2 million in compliance costs per company is too much for smaller high-tech companies -- often gobbling up their entire profit margin. The money comes straight out of the bottom line, said Ciporin. ``It's a terrible burden in many ways,'' he said.

In part, his company is large enough to absorb those fixed costs, Ciporin says, but he wonders how smaller companies will be able to cope.

One is Volterra of Fremont, which had net profit last year just under $5 million. Volterra went public in 2004, but the $1.5 million cost to Volterra of compliance with Sarbanes-Oxley effectively reduced its profit by more than a quarter, said venture investor Gary Morgenthaler of Morgenthaler Ventures.

Fewer immigrant work visas and strict rules on investment banks that discourage research coverage of smaller companies also have created a hostile climate for IPOs, he said.

Allen Morgan, a partner at Mayfield, had a good year last year, seeing two of his local firms go public -- PlanetOut, a gay online media site; and Cytokinetics, a biotech company. But they felt the Sarbanes-Oxley burden, too, he said. ``It's a sledgehammer approach,'' says Jeff Soukup, PlanetOut's chief financial officer.

Recently, the Securities and Exchange Commission extended the deadline for compliance for some rules until 2006. SEC Chairman William H. Donaldson also is considering making modest changes, and Congress may hold hearings this year to examine whether fixes are needed.

Morgan says he has two or three other companies preparing the paperwork for prospective IPOs. But they're also giving greater consideration to an alternative: selling out to a big company.

Indeed, such acquisitions of small companies appear to have picked up recently. The economy continues to expand, and larger companies are buying technology products -- helping to bolster growth at small start-ups, he said.

So, who needs IPOs?

Contact Matt Marshall via his blog at www.siliconbeat.com.