The financial meltdown of 2008 all but shut down venture-backed exits, as we all know. The National Venture Capital Association declared a crisis back in the second quarter, which got worse in the third quarter. This week, the NCVA released its numbers for the fourth quarter and, as expected, they are pretty grim. There were zero venture backed IPOs in the quarter, and only 37 M&A deals (down from 78 in the third quarter). Of the 37 M&A deals tracked by the NCVA, 30 were in IT.
So for the year, that’s six IPOs (down 93 percent) and 260 M&A deals (down 27 percent). The proceeds from those six IPOs brought in $470 million, down from $10.3 billion in 2007. That is the smallest amount of IPO dollars since 1979. The M&A activity was a little better, bringing in $13.9 billion (for those deals with disclosed values). But even that was down 51 percent.
The IPO window was completely closed in 2008, and will likely remain closed throughout most of 2009. That leaves M&A transactions as the only exit for startups. And even those might not rebound until the second half of 2009.
Wow, these are some quite frightening numbers!
“IPOs brought in $470 million, down from $10.3 billion in 2007″ that really shows how flat the stock market got during ‘08
This is certainly not the prime time to execute any type of exit strategy, especially if the exit is an IPO
I believe you are talking about the NVCA not about the Northern California Volleyball Association.
It’s probably a specialized branch of the volleyball association that specializes in M&A research.
So, what you’re saying is the year sucked? Thanks.
This is all to be expected… It will take some time to recover.
Here’s another way to look at the PE/VC year in review http://adjix.com/q84
Good analysis. Thanks Mark.
Nice work!
It would be nice to see back to 2000 on that chart to get a visual on how the current environment compares to when the web 1.0 bubble burst.
I agree, that would be an interesting comparison to see, especially if expressed as a function of percentage to get idea of the relative impacts.
I still don’t quite understand the timing of last year’s Rackspace IPO.
trauma drama. no signs of injury. the wealthy in a true crisis? i doubt it.
ShareLocator.com – there’s enough to go around
Last quarter over 1000 US companies announced(press release) they were acquired. Total M&As aren’t down as much as venture funded M&As. It makes sense because acquirers are looking for profits over revenues/subscribers. Real business valuations are back.
Well it may go into 2010, I think first and second quarters will show the way.
http://www.GetMeValue.com
Wait a second — you mean VCs are going to have to focus on building businesses that generate profits?
What goes down must come up. Maybe not in 2009, but certainly by 2010 the IPO market will restart and M&A activity will get back to healthy levels. Do not jump off the ledge…
Don’t tell my wife… 3 years of blood sweat and tears and now 2 more? Ouch!
oh now! 3 whole years of work. how do you do it?
(sarcasm)
no thanks
Who would have expected that none of the gazillions of Facebook clones were going public?
Turns out all these presumably gold shitting donkeys are… well, just donkeys.
No IPOs means really bad news for Silicon Valley. These IPOs bring in big dollars and also employ many people when they go through, plus enriching VC firms and founders.
blah
This is certainly not the prime time to execute any type of exit strategy, especially if the exit is an IPO
http://www.jugargame.com/
I have warned many times over last year about no exits for Web 2.0 Bubble companies, mostly “me-too” and duplicates that have no viable business models- such as social networking sites, mobile locators and other B.S. ideas. Now, the chickens have come home to roost …………
I know that you have warned us many times. You seemed like you knew things, so I paid attention and stayed out of web 2.0 as a direct result of your warnings. This idea of roosting chickens, do you think that is a good business idea. What do you think I should do; what sector is hot. Where is there money to be made.
location is everything in cyberspace as it is on earth. there is only one master creator.
GodLocator.com – peace yourself
As a private investor in two almost dead VC funds I think some of the funds shuld seriosly start paying back the management fees to the Investors or to the fund.
Whatever the excuse is they clearly failed and clearly draged some startups with them. I suggest that the managers start working for free as they often request startup management to do.
Wouldn’t you realize the risk you’re taking when you make the agreements in the beginning? Why is it an issue worth discussing now and not in the beginning?
I’m not saying I disagree, I’m just saying that this isn’t the time to blame others. There is risk involved with these things and if you believe in what they’re doing, maybe it’s time to roll up your sleeves and get involved to make sure that things succeed.
Maybe if VC firms focused on innovating rather than just collecting their management fees the whole game would change. VCs tend to push too hard for unnatural things to happen (big liquidity events) because of the pressure they feel from their investors to see large returns. I would argue that Angels are going to be the ones who will live up to their heavenly names and become increasingly important to the fostering of early-stage innovation.
Is that with or with lead?
@gorgehu1 – this is comment spam. Go away.