Friday, January 2, 2009

Venture-Backed Liquidity Reaches 5 Year Low

U.S., venture-backed companies are seeing their lowest liquidity in five years, according to a report released today by Dow Jones VentureSource. Dow Jones found that there was only $24.1 billion in IPOs and M&A in 2008, making 2008 the worst year in terms of liquidity for the venture capital industry since 2003. Dow Jones said the totals were down 58% from the liquidity produced in 2007. In the fourth quarter, there was only $3.9 billion generated via merger and acquisitions, and no IPOs. Even worse, Dow Jones found that the median amount paid for VC-backed companies in 2008 was cut in half, to $45M, from the 2007 median of $90M--if you could sell your firm--the company found that only 65 venture-backed companies sold in Q4, down from 123 companies sold in the fourth quarter of 2007. The IPO market was even worse, with only seven venture-backed companies successfully going IPO in 2008 -- with none in the second or fourth quarters.