Exit activity for venture-backed companies moved closer to levels seen prior to the recent economic downturn, according to figures released today by industry tracker Dow Jones VentureSource. 514 companies achieved liquidity in 2010, netting $39.3 billion, a 25% increase in exits from 2009.
46 venture-backed companies went public in 2010, raising $3.4 billion. That’s a five-fold increase from the 8 IPOs that raised $903 million in 2009. M&A activity did drop off in the fourth quarter of the year, but overall it was ahead of 2009 as well, with 445 M&As raising $33.9 billion.
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While the number of exits and the capital gained through them were up, these figures still don’t match 2007 levels.
“Exit activity is staging a comeback but capital netted lagged as large M&As and IPOs were still uncommon in 2010,” said Jessica Canning, director of global research for Dow Jones VentureSource. “While it isn’t clear if companies with blockbuster potential – like Facebook and Groupon – will come to market in 2011, there is a healthy IPO pipeline. Currently, 44 companies are registered to go public, up from 25 at this time last year.” Indeed, there has been much speculation about 2011 being the year of the “blockbuster tech IPO,” particularly following recent funding rounds by Groupon and Facebook.
The report from Dow Jones VentureSource offers promising news, even if these “blockbuster” IPOs don’t materialize this year. “After holding back on acquisitions the last couple of years, corporations found themselves with a significant amount of cash on hand and the need make strategic acquisitions to maintain a competitive edge,” said Scott Austin, editor of Dow Jones VentureWire. “Combined with rising valuations that made investors and entrepreneurs more inclined to sell, M&A picked up – a trend likely to continue into 2011.”
Photo credits: Flickr user John Manoogian
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