| |||||||||||||||||||||||
| |||||||||||||||||||||||
While statistics from the National Venture Capital Association and Dow
Jones VentureSource don't always match up exactly, they agreed on at least one thing Tuesday:
There were no venture-backed IPOs in the second quarter of 2008.
This, the NVCA said, marks the first quarter in 30 years that didn't see any VC-backed offerings. The industry group called the situation in the capital markets a "crisis for the startup community." Further, the NVCA pointed to a exit poll, which it issued alongside Thomson Reuters, in which two-thirds of VC respondents said their portfolio companies are less likely to want to enter the public markets than they had been three years ago, with skittish investors, the credit crunch and Sarbanes-Oxley being the most popular reasons.
There were five IPOs in the first quarter, the NVCA said, a far cry from the 43 offerings in the first half of 2007. Meanwhile, liquidity through M&A activity fell off 47%, according to Dow Jones VentureSource's Quarterly U.S. Liquidity Report, generating only $4.7 billion through 56 deals -- the fewest number of deals in at least 10 years. In the second-quarter 2007, 97 million deals generated $8.8 billion, the report said. The median price paid also dropped, falling 7% from more than $22 million in the second quarter of 2007 to $21.3 million in the second-quarter 2008, while the median amount of time from funding through to M&A is at a record seven years, Dow Jones noted. (Dow Jones later issued a statement correcting these figures: In the second quarter of 2007, the median price paid was $55.8 million. In the most recent quarter, it was up 57% to $87.6 million.) "Corporations might be out looking for venture-backed companies to acquire, but many are either doing so quietly or choosing to hold off on entering into negotiations," Jessica Canning, Global Research director for Dow Jones VentureSource, said in a statement announcing the findings. "This, coupled with the closed IPO window, is putting downward pressure on acquisition prices." IT, and software companies specifically, accounted for the majority of M&A. Time Warner Inc.'s $850 million deal for Bebo Inc. was the quarter's largest deal, both reports noted. The last VC-backed IPO was in March, while 10 have pulled their registrations since then, and 22 are in registration, Dow Jones said, waiting to see if things improve. Meanwhile, what's a startup to do? Some are turning to new investment banks as they look to shore-up late-stage financing, The Wall Street Journal reported Tuesday. Some of these sources include: Chicago-based Advanced Equities Financial Corp.; Boston's Revolution Partners; and GCA Savvian and Bandon Partners, both of San Francisco, the Journal said. Meanwhile, VCs also need to put more money toward their later-stage portfolio companies. "When you're looking at exiting, you're looking at today, and the economics of today are not good," NVCA president Mark Heesen said back in January. "They're still in your nest, and you still have to feed them." - Carolyn Murphy See NVCA release See Wall Street Journal story See related January story: What, VCs worry? Categories Deal Video
    Community
 Elsewhere on The Deal.comDealwatch
The Deal MagazineCorporate Dealmaker
The Deal VideoCategories
Blog roll
Archives
| |||||||||||||||||||||||
|
|
|
|
|
©Copyright 2009, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.
