Raising money in Silicon Valley is pretty hard, as any entrepreneur will tell you. The later the stage, the harder it seems to become to get that funding.
So no surprise that nearly half of all companies didn’t make it past the early stage last year, according to data out from CB Insights.
In all there were over 3,400 exits in 2015, and 48 percent of them exited in either the seed/angel stage, or after raising their Series A. That breaks down just about evenly, with 25 percent of exits after the very earliest stages, and the other 23 percent coming after the A round.
After that, the numbers start to get smaller. Only 15 percent had an exit after raising a Series B round and 12 percent after a Series C round, for another 27 percent.
Only 13 percent of tech exits came after the company raised Series D or Series E.
While the number of exits increased 14 percent year-to-year in 2015, they peaked in the second quarter with 1,001. After that they dropped over 19 percent to 796 in the third quarter and then another 11 percent to just 717 in the fourth quarter, the lowest number since the first quarter of 2014.
There are only two ways for a company to exit, of course: to be acquired or to go public. Last year only 61 exits were IPOs, or 1.8 percent.
That coincides with the data that shows that, by any measure, 2015 was a terrible year for the IPO market.
There were 169 IPOs in all, which raised $30 billion in 2015. Not only was that a 39 percent drop in volume, and a 65 percent drop in money raised, but numbers were the lowest since 2009, which was right in the heart of the recession.
Mergers and acquisitions, on the other hand, had a huge 2015. It was actually the most active year on record for announced deals in the US technology sector, as the number increased by a whopping 82 percent over 2014, jumping from $171.6 billion to $313.1 billion.
When it comes to deals that actually closed, though, the numbers don’t look quite as good. Only 278 transactions closed last year, totaling $147.7 billion, leaving over $150 billion, or more than half, still pending. Both the number of closed deals, and their value, actually dropped from 2014, which had seen 289 deals valued at $164.8 billion.
The reason for all that deal value still being left on the table was due to a proliferation of megadeals, or those deals that are valued at over $5 billion.
2016, however, might actually wind up being a better year for IPOs, as there are 531 venture capital and private equity-backed technology companies that could go public in 2016. While that is down from the 588 tech companies identified for 2015, at the same time the average amount raised by 2016 pipeline companies is $182 million, up from $111 million for last year’s companies.
So it looks like the companies that might go public in 2016 are actually stronger than they were in 2015, even if there are fewer of them.
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