Uncle Sam drives VC deals in Q3

IPOs are up, thanks to government-backed A123. Cleantech passes bio & software in VC investment.

The numbers are out, and they tell the story of more centralized economy. Three of the biggest deals, A123's IPO and the funding rounds for Solyndra and Tesla, were all pushed with lots of tax dollars.

A123 systems $371.25 million IPO in late September accounted for most of the $451.25 raised via IPO in Q3.

Spurred on by this government funding, cleantech as an investment class overcame biotech and software to become the top U.S. venture capital area of investment, according to the cleantech group.

A123 rose 50% on its first day of trading, but still only produced a 4.14 return multiple for the six largest VC Shareholders, according to PE Hub.  The company simply too much investment, $240 million worth of VC, to make it a high yield for any given firm.

Overall, capital raised via IPO hit the highest levels since 2007. M&A raised $2.25 billion in  71 transactions in Q3, down 56% from $5.16 billion in Q3 last year. The amounts match pre-boom levels in 1999.

The median amount paid in M&A deals--$22 million--is a 52% drop from the $46 million in Q3 2008--a sign that startup valuations have followed the market down. The decrease in amount of capital raised before exit, a 21% decline from $20.85 million in Q3 2008 to $16.5 million is not yet in line with these lower valuations.

Venture backed liquidity in general is down 49% from $5.32 billion in Q3 2008 to $2.7 billion this past quarter.

There are some bright spots on the horizon, though. All the M&A data would have been significantly altered if Amazon's acquisition of Zappos had come through. It's still pending, and will boost the Q4 numbers when it happens. And Uncle Sam has not put any money into Zappos.