"The most significant impact of the US financial crisis on the venture capital industry has clearly taken place in the exit markets," said Mark Heesen, president of the NVCA. "The inability of our strongest companies to go public and the softening of acquisitions activity continue to have a major ripple effect that now reaches every stage of the venture investment lifecycle. As a result, new investments and fundraising will slow considerably in 2009 until the exit markets re-open and the pipeline is cleared. The venture community is poised and ready to bring the next generation of great companies to the capital markets and strategic buyers and, as we have done historically, contribute substantially to economic growth and innovation."
IPO Activity Overview
There were no venture-backed IPOs in the fourth quarter of 2008, the second quarter of the year with no activity. The last year there were two quarters without any IPO activity was 1975, when both the first and fourth quarters had zero exits. By dollar volume, total IPO proceeds in 2008 reached $470.2 million, the lowest value since 1979 with $339.7 million.
Echoing domestic trends, no companies that received US venture financing went public on foreign exchanges in the fourth quarter.
As of December 31, 2008, five of the six venture-backed companies that went public during 2008 were trading below their offering price.
Twenty-eight venture-backed companies are currently filed for an initial public offering with the SEC. This level falls short of 3Q 2008 when 38 venture-backed companies were in registration. There were 40 venture-backed IPOs withdrawn from registration in 2008.
For the full-year period, four venture-backed IPO exits totaling $221.0 million in proceeds came from Life Sciences issuers. The remaining IPOs came from Information Technology companies and accounted for a combined $249.3 million.
The largest IPO of the year was the $187.5 million issue by web hosting provider Rackspace Hosting in August.
Mergers and Acquisitions Overview
As of December 31, 2008, 37 venture-backed M&A deals were reported for the fourth quarter, 15 of which had an aggregate deal value of $2.1 billion. The average disclosed deal value was $139.4 million.
The Information Technology sector dominated the venture-backed M&A landscape, with 30 deals and a disclosed total dollar value of $972.2 million. Within this sector, Internet Specific companies accounted for the bulk of the target companies, with 11 transactions across this sector subset. Life Sciences saw the next highest level of activity with four deals and a combined disclosed value of $173.7 million. Finally, Non-High Technology deals accounted for three exits with disclosed values of $945 million.
For full-year 2008, Information Technology transactions accounted for the majority of M&A exits and volume, with 190 transactions and disclosed aggregate values of $8.3 billion, or 60 percent of the total. Non-High Technology and Life Sciences followed with 25 percent ($3.4 billion) and 15 percent ($2.2 billion), respectively.
As of December 31, 2008, 37 venture-backed M&A deals were reported for the fourth quarter, 15 of which had an aggregate deal value of $2.1 billion. The average disclosed deal value was $139.4 million.
The Information Technology sector dominated the venture-backed M&A landscape, with 30 deals and a disclosed total dollar value of $972.2 million. Within this sector, Internet Specific companies accounted for the bulk of the target companies, with 11 transactions across this sector subset. Life Sciences saw the next highest level of activity with four deals and a combined disclosed value of $173.7 million. Finally, Non-High Technology deals accounted for three exits with disclosed values of $945 million.
For full-year 2008, Information Technology transactions accounted for the majority of M&A exits and volume, with 190 transactions and disclosed aggregate values of $8.3 billion, or 60 percent of the total. Non-High Technology and Life Sciences followed with 25 percent ($3.4 billion) and 15 percent ($2.2 billion), respectively.
