IPO, M&A Boosting Venture Capital Fortunes

6 Comments

Venture capital industry is seeing a return of the good times — at least from an Merger & Acquisitions (M&A) and Initial Public Offering (IPO) perspective. According to data released by National Venture Capital Association (NVCA), during the third quarter 2010, there were 104 mergers and 14 IPOs of venture-backed companies. This trend is going to continue right through the end of 2010, NVCA said.

We agree; the recent acquisitions of 3PAR and Blade Technologies are a good indication that large companies in the IT sector are loosening their purse strings. While only 27 companies disclosed the value of their M&A deals, giving the total disclosed value at around $3.84 billion, it’s the IPO market which is encouraging: $1.25 billion raised from 14 deals, with each offering worth $89.2 million.

Here are some stats:

  • Of the 14 IPO exits, eight were from the information technology sector and accounted for $750 million of the total, with Sequoia Capital-based GreenDot Corp. (s GDOT) being the biggest, having raised $164 million.
  • ?IT sector in total accounted for 82 deals with a total dollar value of $1 billion.
  • Internet and computer software accounted for the most deals: 32 and 33 respectively.
  • Of the total 27 M&A deals with full financial details, five had a transaction value of 10x the venture dollars invested, four deals got a value at 4 times the dollars invested, and seven were below investment levels. Eleven deals had a transaction value of between 1 and 4 times the total venture investment.

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6 Comments

Manoj Ranaweera

Hi Om

This is very timely information, as we are gearing to run our first Tech IPO event on 8th Nov 2010 in Manchester, UK. More information on http://www.techcelerate.org/nov10. You will also see from my short article http://manojranaweera.com/2010/10/02/north-west-top-region-for-ipos that IPOs aren’t that hot in the North West, so the intention is to stimulate the conversation.

Having said that FreshTL quietly listed on the plus market and Daisy Plc listed last year through a reverse takeover.

Lot of work to do turn the north west to a tech hub.

Best regards
Manoj

IPO

Good to see this rising trend. If venture funds can start to increase returns – then more funds will materialize – which then means more companies coming out and innovating. And they will have access to the capital to pull it off!

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