UPDATE 2-SolarWinds IPO prices at $12.50, above range

* SolarWinds IPO prices at $12.50, above range

* IPO first venture-back deal by tech co since August (Adds background on ownership, byline)

By Phil Wahba

NEW YORK, May 19 (Reuters) - Software maker SolarWinds Inc's (SWI.N) shares priced at $12.50 per share in the company's initial public offering on Tuesday, the company said, exceeding expectations.

The Austin, Texas-based maker of network software sold 12.1 million shares, raising $151.5 million in the first venture-capital backed IPO by a technology company in the United States in more than nine months, and the sixth overall on a U.S. exchange so far in 2009.

The company had expected shares to price between $9.50 and $11.50 apiece.

"Ten years ago, a tech company would be in the R&D phase, not serving Fortune 500 companies before trying an IPO -- it's a mature, viable company," said Scott Sweet, a senior managing partner of advisory firm IPO Boutique.

The company was founded in 1999 but only filed for its IPO in March 2008, illustrating how tech companies attempting stock flotations are more mature than their forbearers from the dot-com boom of the late 1990's.

"But they will have to concentrate on the smaller companies in that they've already packed their Fortune 500 clients with installations," Sweet said, adding that the market for serving small and mid-sized companies is less competitive.

SolarWinds' says its main competitors include Hewlett Packard Co (HPQ.N) International Business Machines Corp (IBM.N) and Cisco Systems (CSCO.O).

The last venture backed IPO by a tech company in the United States was by Rackspace Hosting Inc (RAX.N) in August 2008, but its shares fell 20 percent in their debut.

SolarWinds saw its net income rise by 63.9 percent in 2008 to $22.3 million, on revenues of $93.1 million, according to a regulatory filing.

Its backers include venture capital firms Bain Capital Ventures and Insight Venture Partners, which bought a 67.8 percent share in the company in 2005 from its original stockholders.

About one quarter of the shares being sold are held by existing shareholders, which include SolarWinds officers and directors.

According to its IPO registration, the company plans to use the deal's proceeds in part to pay off long-term debts, a payout to its original shareholders and for working capital and acquisitions.

The company expects to begin trading on the New York Stock Exchange Wednesday under the symbol "SWI."

The underwriters, led by JP Morgan (JPM.N) Goldman, Sachs & Co (GS.N) and Morgan Stanley (MS.N), have the option to buy another 1.8 million shares. (Reporting by Phil Wahba; Editing by Gary Hill and Carol Bishopric)