The first quarter is now officially over, and it was another dry one for venture-backed exits. Once again, there were zero venture-backed IPOs and only 56 M&A transactions, according to the National Venture Capital Association. Those numbers are down from five IPOs and 106 M&A exits in the first quarter of 2008. Six venture-backed IPOs were withdrawn from registration during the quarter.
The disclosed value of those M&A deals in the first quarter of 2009 was $645 million, down from $4.5 billion a year ago. That amount is also down from the $2.4 billion in M&A deals in the fourth quarter of 2008, when there were 61 deals. The average deal size has dropped dramatically from $140 million in the fourth quarter (and an average of $115 million all last year) to $50 million in this past quarter. You can see the data in various charts below and on this page.
It is not pretty out there. As long as the exit window remains shut, venture firms will remain cautious with their money.
Of all the deals, nearly half (24) were in computer software and services, 9 were Internet startups, and 11 were life sciences. The largest acquisition in the quarter was in fact a medical device company, Ablation Frontiers, which was bought by Medtronic for $225 million.
It’s good to hear that Medtronic is still buying companies.
Ebb and Flow,
Capital washes clean,
More deals will happen soon.
Erick, you really need to read something happy and cheer up a bit. Enough of this depressing news! Even miserable ol’ Arrington is in a better mood than you today. Here, try this:
http://www.tech...ogle-master-ai/
Time to start a “monetize-first” startup.
smarter investors
we have a monetize first startup;
umakeitcool.com
Cronies are no longer buying … EVEN from their own cronies.
Funny.
This is not surprising, but it is BIG news. I’m surprised at how few comments there are! SAInsider also pointed out that there has only been 1 IPO in the last year. In case you thought that was a typo, apparently not. ONE.
Things that come to mind:
1) What does this mean for Tier 2 and 3 venture firms?
2) What does this mean for angel investors?
3) What does this mean for the SF Bay Area economy given how much liquidity flows out of M&A and IPO events into local businesses
IMHO: Not good, my friends, not good…and it’s very difficult to see how the IPO market is going to come back anytime soon or with any strength. Aversion to risk is at an all-time high, the wealthy are scared, the rest of us are cocooning. Yes, there is a lot of money on the sidelines, growing every day with the new frugality mentality, but are IPOs going to be a preferred asset class as they once were? Seems unlikely. There will always be room for “name brand” listings like GOOG or CRM, but not so sure about the bit.ly’s of the world…
Keep your seatbelts fastened.
Damn. We have become our own worst enemy!
April Fools!
that’s M&A but I was wondering how many startups raised and how much. Did you post on that Erik?
The NCVA reports that separately. Q1 data on venture funding is not out yet. This was just exits.
The posting of this article will indicate that we have reached the bottom. Changyou.com just IPOed. There are other signs of IPO pendings. Stay tuned …..
This is one more reason why capital efficiency is more important than ever for venture-backed startups. Peter Yared, CEO of iWidgets, blogged about that today.
Excerpt: “While you can’t build a business without a plan, capital efficiency is the often-overlooked key ingredient for a successful startup. Capital efficiency isn’t just about not wasting money, it’s also about not having any fat. Too often, bloated, fatty companies are insulated from market realities — you can’t feel it when the road starts to get rough. So it is not just in this economic climate that startups should be capital efficient, it is always.”
Here’s a link to the whole post with a list of cardinal no’s and a few yes’es: http://bit.ly/1LMUBx
The news is terrific in Central Ohio. We have an excellent innovation economy. In 2008, there was a 9.1 percent increase in venture investments over 2007, amounting to over $172 million. 57 companies received funding in 2008, including 3 exits (down from 8 in ‘07). Much of this was capital inflow from outside of Central Ohio.
Idea flow is strong and we have a high energy level in the Central Ohio tech community, which bodes well for the future. The potential is being recognized. For example, Forbes’ ranked Columbus as the #1 Up and Coming Tech City for 2008.
Check out the 2008 Central Ohio Innovation Capital Report prepared by TechColumbus here: http://bit.ly/TBbvU. It provides an excellent overview of seed, early stage, growth and other investments.