Wednesday, April 05, 2006

VC exits: M&As continue to grow, IPOs raise less and less, VC investments increase

Jeff Clavier's discusses some interesting statistics on VC exits:

"The good news is that M&As are continuing on a reasonably steady pace, with 95 deals worth $5B in Q106, and 345 deals worth $16B in the whole of 2005 - this number actually excluding the Skype deal (worth $2.6B + a $1.5B earn-out). The bad news is that IPOs have trickled down to a meager $540M raise in 10 operations in Q106.

I was discussing with a VC friend of mine the other day, pointing out that an IPO in the US was becoming less and less credible for VC-backed companies - leaving them with 3 other options: floating on a non-US exchange (like London), M&A and private equity buyout where a “new round” of investors purchase a large portion of the shares by founders and early stage investors - fueling the growth of the company."

Tim Mullaney later discusses this, and points out that Sarbanes Oxley is the reason why most startups don’t get to IPO.

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