Anyone else concerned about the lack of any IPO “exits” for venture-backed companies this quarter?. In fact, there weren’t any IPO exits this quarter which apparently hasn’t happened in 30 years. I decided to join the discussion and my comment trying to explain the lack of IPO exits is re-published below:
Like the article suggests, there are a couple different factors for the zilch IPO exits in 2Q 2008. 3 reasons for the lack of IPO exits (besides SOX stuff) are:
(1) Recent IPO exits have not done well – I think the statistic I remember from a couple months ago (NVCA presentation) was that only 28% of IPO exits (from 2007?) were trading above their IPO price.
(2) Cleantech/greentech takes a long time – Although keep in mind this, while a hot field, only comprises about 10% of funding. So there’s a bunch of capital going here the past 2 years (3.5B) that isn’t looking to exit anytime soon.
(3) Natural VC pattern – The number of first time fundings has increased every year since 2003, with 2007 being the best year post-bubble. Maybe the industry is just stuck between the not-a-lot-funded exit time/a-lot-funded early stage time?
It’s also worthwhile to look at the M&A exits, considering they have outnumbered IPO exits a little greater than 4:1 since 2004. While some of these exits were “fire sales” the quality of these exits is increasing every year. For first fundings from 1991 to 2000, M&A exists outpaced IPOs by a little more than 2:1. Currently, M&A exits are having a slow go of things. But there were still 56 M&A exits in Q1 2008.
Ryan RobertsPartner
Ryan Roberts is a startup and venture capital attorney and partner at Roberts Zimmerman PLLC with more than two decades of experience advising high‑growth startups and venture capital investors. He is the author of Acceleration: What All Entrepreneurs Must Know About Startup Law and StartupLawyer.com
