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Positive Signs in Venture Capital

January 7, 2010

The National Venture Capital Association put out its fourth quarter numbers for venture-backed exits. After suffering somewhat of a dry spell earlier this year, things are starting to turn up, with increased M&A activity and IPO activity.

This is the metric to watch as venture capitalists need exits to recap and continue funding. Companies such as Google, Microsoft, Apple, and Cisco have been sitting on significant amounts of cash and renewed (though tempered) optimism in the market and rising stock values is spurring activity.

Venture-backed company exit activity showed promising signs of life during the fourth quarter of 2009 but fell far short of historical norms for the year, according to the Exit Poll report by Thomson Reuters and the National Venture Capital Association (NVCA). The year ended with 13 venture-backed Initial Public Offerings (IPOs) and 262 M&A transactions.

While there were five venture-backed IPOs in the fourth quarter, a slight uptick from the third quarter of 2009, the last two years have been the slowest consecutive years for US venture-backed IPO activity since 1974-1975. The tally of M&A exits as of the last day of the quarter was 67 with 36 disclosed deals averaging $215.9 million, the highest quarterly average since the fourth quarter of 2007.

The report numbers can be viewed here.

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@inmotionre January 12, 2010

The IPO pipeline definitely seems to appear promising for 2010, especially in the tech sector. I think we can expect to see a lot of deals come out this year that have been sitting on the fence…

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