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Network World - Only four venture-backed information technology companies completed IPOs in 2009, just a fraction of the amount seen in previous years, according to new data from Dow Jones VentureSource.
The IPO market looks poised for a small rebound in 2010, but struggled throughout 2008 and 2009.
Twenty-eight venture-backed IT companies completed IPOs in 2007, and an average of 12 per year took the plunge in the four years prior to that. But only two IT companies did so in all of 2008, and just four in 2009.
The year's largest IPO, in both the IT sector and other industries, was a $371 million offering by A123 Systems, which makes rechargeable lithium ion battery systems and went public in late September, Dow Jones said.
The other three IT public offerings came from LogMeIn, a remote desktop control vendor; Solar Winds, a network management and monitoring company; and Fortinet, a network security vendor.
Four non-IT companies made public offerings in 2009, for a total of eight IPOs on the year, raising $904 million. That was an increase over the seven IPOs raising $551 million in 2008.
Across all industries, 25 venture-backed companies are in the IPO registration phase, signaling that a rebound might be seen in the next year. Mergers and acquisitions may also increase.
"As the economy improves, acquirers are gaining confidence in their own financial situation and returning to strategic acquisitions," Jessica Canning, director of global research for Dow Jones VentureSource, said in a news release. "At the same time, the steady trickle of public offerings is teasing investors who expect the IPO window will re-open in the coming year."
Low M&A and IPO activity in the past two years has dramatically impacted the venture capital market, with investors now less willing to invest in start-ups. But the fourth quarter was the best one in 2009, providing some optimism for the next year.
"Throughout 2009 venture-backed companies generated $17.1 billion in liquidity, 34% less than the $26.1 billion produced in 2008," Dow Jones said. "Forty-four percent of the year's total liquidity was generated in the fourth quarter."
In 2009, 326 mergers and acquisitions raised $16.2 billion, a 37% decline from $25.6 billion raised with 380 deals in 2008, according to Dow Jones.
But for the first time in almost a decade, the median amount paid by an acquirer for a venture-backed company exceeded $100 million, and in the fourth quarter the median price was $145 million.
Start-ups are also gaining liquidity after smaller investments in both time and money.
"The median amount of venture capital raised prior to an IPO fell 22% from $55 million in 2008 to $43 million in 2009," Dow Jones said. "The median amount of time it took a company to reach liquidity fell to 7.9 years after hitting a record 8.7 years in 2008."
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