Deals

Q1 venture-backed IPOs strongest since 2007

The initial public offering market for venture-backed companies in the first quarter was the strongest since 2007, according to a report by Thomson Reuters and the National Venture Capital Association.

Fourteen VC-backed IPOs occurred in the first quarter, with companies raising an average of $98.3 million. The total amount raised was $1.37 billion. Coupled with a strong acquisition market, the results showed that venture capitalists are finally getting some decent exits as the tech industry recovers from the recession.

During the quarter, 109 venture-backed companies were acquired. Of the 45 deals where the acquisition price was disclosed, the total purchase prices added up to $5.9 billion.

“The venture capital exit market today is exhibiting a welcome stability in terms of both IPOs and acquisitions,” said Mark Heesen, president of the NVCA, the trade group for the VC industry. “For more than a year, we have seen a high volume of strategic sales that are bringing in solid returns for the venture industry, coupled with an IPO market that is growing and improving steadily in terms of volume and predictability.”

Heesen added, “This stability is an absolute prerequisite for the growth we need, particularly in the capital markets where the volatility of the recession years contributed to the many challenges of companies going public. A successful 2011 will be contingent upon maintaining the momentum in the acquisitions market while moving the current IPO pipeline through at a faster clip. Ideally we would like to see a 20 to 30 percent increase of US venture-backed companies going public this year. Market signs currently suggest that this is a reasonable goal.”

As you can see from the chart below, the merger and acquisition exits are far more popular than IPOs now. In 2010, there were 431 M&A deals, compared to just 72 IPOs. Back in 2007, there were 380 M&A deals and 86 IPOs. And way back in 1999, there were more than 300 IPOs.

[photo credit: greentechmedia]