Venture capitalists are probably glad 2008 is over as liquidity events were hard to come by during the toughest economic times in recent history.
Overall, U.S.
venture-backed companies generated $24.1 billion in liquidity through IPOs and
M&As in 2008, down 58% from the $57.6 billion in liquidity produced in
2007, resulting in the worst year since the post-tech-bust doldrums of
2003, according to according to Dow Jones VentureSource.
Just seven companies completed IPOs in 2008, raising $551 million, down from $6.8 billion generated through 76 IPOs in 2007. The totals in both number and dollar amount were the lowest since Dow Jones VentureSource began tracking the venture industry in 1992. Only 18 venture-backed companies are in the pipeline. But their offerings will likely be postponed as they filed prior to October, said Jessica Canning, Global Research Director for VentureSource.
As for mergers and acquisitions, only 325 venture-backed companies merged or were acquired in 2008, the lowest number of M&A transactions since 1999, and down 29% from the 457 companies bought in 2007.
Only 65-venture-backed companies sold for an aggregate $3.9 billion in the fourth quarter of 2008, the lowest quarterly transaction since 1999, and well below the 123 companies that sold for $16.4 billion in the last quarter of 2007.
(Image source: Metrics2.com and im.rediff.com)
Are we actually in the midst of DotComCrash 2.0? Is that a bad thing? Were expectation getting too high anyway? Is it time for some realism to return?