U.S. IPOs suffer terrible Q1 as capital raised falls 71%

There were only 6 venture-backed IPOs, which raised a $377.8M, down from $1.3B in Q4

Financial trends and news by Steven Loeb
April 13, 2016
Short URL: http://vator.tv/n/44bd

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There is every indication that the market has been shrinking, both globally and in the U.S. with the data showing every aspect of venture capital shrinking. Well, almost every aspect

It's gotten harder for companies to raise money, with dollars and deals shrinking to their lowest levels in years, but it's become just as difficult for companies to find their way to an exit. In a way, it seems, they're kind of stuck.

In the first quarter of 2016, exits in the U.S. fell to their lowest levels in at least the last three years, according to the Venture Capital Report from Dow Jones VentureSource.

There are, of course, two kinds of exits, acquisitions or public offerings. Here is how they faired individually:

There were 112 mergers and acquisitions of venture-backed companies in Q1, a decrease of 7 percent from 120 deals in Q4. In all the deals this past quarter garnered $19 billion, an increase of 19 percent from Q4, when the number was $16 billion. 

The biggest acquisitions of the quarter were:

  • Legend Pictures, which was acquired by Wanda Group for $3.5 billion
  • Jasper Technologies, which was acquired by Cisco Systems for $1.4 billion 
  • Solidfire, which was acquired by NetApp for $870 million 

Together, those three companies represented 30 percent of all the money raised via acquisition in the first quarter. 

Meanwhile, IPOs hit the bricks in the first quarter of this year, slumping to just six altogether, a fall of 60 percent quarter-to-quarter. The amount they raised fell even further, decreasing by 71 percent from $1.3 billion in Q4 to a mere $377.8 million in Q1.

If these numbers are any indication, then the IPO market is not going to bounce back from its terrible 2015, when numbers fell to their lowest level since 2009.

The three largest IPOs, all of which were in the biotech space, were:

  • AveXis, which raised a $95 million IPO
  • Editas Medicine, which raised a $94.4 million IPO
  • Corvus Pharmaceuticals, which raised a $70.5 million IPO

Those three companies represented 69 percent of all the money raised by IPOs in the quarter.

These numbers reflect what happened to the exit market on a global scale as well. 

Globally, the number of exits fell 26.5 percent qiarter-to-quarter, from 355  in the fourth quarter of 2015 to only 261 this past quarter. Capital exited fell 50 percent percent, from $25.2 billion to $12.4 billion.

The overwhelming majority of exits during Q1 were acquisitions; 212 of them, or 81 percent. There were only 13 IPOs and 36 buyouts.

(Image source: cathykuzel.com)

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