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Two Words For Startups Looking For An Exit: Good Luck

For the second straight quarter, there wasn’t a single venture-backed IPO in Q109, and merger-and-acquisition activity was down sharply, according to a quarterly report from the National Venture Capital Association.

No category, including both “communications and media” and “internet-specific” companies, was immune from the weakness. There were five “communications and media” deals and nine “Internet-specific” deals this quarter. A year ago, there were six “communications and media” and 12 “Internet-specific” deals.

Given the non-existent IPO market, corporate acquirers are in a position to be more selective and bide their time when considering acquisitions,” said Mark Heesen, president of the National Venture Capital Association, in a statement. Overall, the number of deals dropped almost in half, from 106 in the first quarter of 2008 to 56 in the first quarter of this year. Returns for venture- capital firms also shrunk, with the group reporting that only 23 percent of deals were valued at more than four times the venture investment, down from 46 percent a year ago.

Going ahead, the National Venture Capital Association does not expect the picture to improve any time soon.”We expect to see a slowing of transactions this year as the best venture-backed companies will wait for market conditions to improve rather than accepting the lower valuations associated with the challenging market,” Heesen said.

One Response to “Two Words For Startups Looking For An Exit: Good Luck”

  1. Shelly Jacobs

    Holy Batman! They are giving a sale and no one is buying?

    NOW is the time to scoop up the legacy content, on the cheap! IPTV, 2D-to-3D & colorization conversions [new 95 yr copyrights], cheaper & typical 100+mg in-home bandwidth, HD upconversions, 1TB el cheapo flashcards for your iPod & cell phone, $49.95 HD DVRs, and Ultra-HD . . . some are here, the rest are coming.

    Reminds me of the now-deemed-morons who threw away their 35mm & 16mm prints & negatives in favor of then analog tape, thinking that technology had reached its pinnacle at . . . "Wow, we got color TV . . . genuine RCA color TV!"