Many venture capitalists might keep talking about a resurgent exit market, but it’s much more prospective than current data would suggest.
Data released last week by Thomson Reuters (publisher of PE Week) and the National Venture Capital Association (NVCA) show that both IPO and M&A exits declined in the third quarter.
Only three VC-backed companies went public last quarter, raising a combined $572 million in proceeds. This is down from the five VC-backed IPOs that raised $720 million in Q2.
Meanwhile, as of late last week, 20 VC-backed companies currently are filed to launch IPOs.
On the M&A front, just 62 VC-backed companies were sold with disclosed values of $1.2 billion during Q2. This compares to 64 VC-backed companies being sold the prior quarter, with $2.57 billion in disclosed value. Worth noting that eight more companies disclosed their sale price in Q3 than in Q2.
However, the NVCA is certain that IPOs will rebound in 2010. For those looking for encouragement, they point to the $340.4 million raised by battery maker A123 Systems Inc., which accounted for more than half of what was raised by venture-backed IPOs in Q3. The A123 Systems offering was the largest since March 2007, a year in which there were 86 venture-backed IPOs. That was a peak year since the dot-com bust of 2001.
The other two third-quarter IPOs were LogMeIn Inc., a provider of remote access applications, which raised $106.7 million in the communications and media sector, and Cumberland Pharmaceuticals Inc., a specialty pharmaceutical company in Nashville, Tenn., which raised $85 million.
“The fact that the many in the media are classifying three IPOs [in Q3] as a resurgence is evidence of how low our expectations have become,” NVCA President Mark Heesen said in a statement.
Still, that was more than the one deal worth $187 million in the third quarter last year. —Dan Primack. David Lawsky from Reuters contributed to this report.