Venture-Backed Exits Fall to Two-Year Low

Only 17 companies had initial public offerings (IPOs) in the first quarter of 2015, the lowest number since the beginning of 2013, according to data from Thomson Reuters and the National Venture Capital Association (NVCA). This is a significant drop from the 37 IPO exits in the first quarter of 2014. Mergers and acquisitions (M&A) were also down, with 86 exits, compared to 115 in Q1 2014. While 2014 was an unusually active time for venture-backed exits, the current data appears to be a return to recession-era levels of deals and disclosed values.

In their release, NVCA noted that a large number of venture-backed companies already have publicly filed for IPOs and there is no reason for concern yet about the future health of the venture market. However, the lull in activity could indicate that the burst of exits in all four quarters of 2014 was an anomaly.

Companies in the biotechnology and medical sectors dominated IPO activity. Of the 17 companies that achieve IPOs, 13 were in these sectors.

Venture fundraising remained strong in the first quarter of 2015, with firms raising more than $7 billion, according to NVCA. This is an increase from the $5.8 billion raised in the previous quarter, but in line with overall levels in 2014.

The number of funds raised, however, fell to recession levels. Last quarter, 61 funds were raised, including 18 new funds and 44 follow-on funds. This is the lowest number of funds raised since the first quarter of 2013.

Full venture capital activity numbers are not yet available, but CBInsights reports that early stage tech funding appears to have increased. Their data indicates that $1.5B was invested in 462 early stage tech firms in March, a multi-year high. (Please note that these figures may differ from the PricewaterhouseCoopers/NVCA Moneytree Survey results reported by SSTI).