Venture-Backed IPOs Soared in 2007; Boston Led the Way in Fourth Quarter

1/2/08Follow @bbuderi

A wave of initial public offerings in the fourth quarter of 2007—led by companies in Boston and San Jose—helped make last year the best IPO year for venture-backed firms since 2004, according to a report released today by Thomson Financial and the National Venture Capital Association.

The fourth quarter saw 31 venture-backed IPOs (totaling $3 billion), the highest quarterly volume since the bubbly days of the third-quarter of 2000, the study reported. The Q4 surge brought the year’s total of IPOs for venture-backed firms to 86, up more than 50 percent from last year’s 57. The $10.3 billion total value of the deals doubled last year’s $5.1 billion and marked the highest annual total since the $11 billion tallied in 2004.

What was a good year on the national scene seemed especially good for the Boston area. Of the 31 IPOs in the U.S. in the fourth quarter, four were from the Boston metropolitan region, according to the Thomson-NVCA figures. That tied the San Jose area for first place nationwide. For the full year, Boston tallied 17 IPOs worth $1.3 billion, second only to San Jose’s 19 deals worth $2 billion.

For the year, information technology companies saw the most IPOs: 47 deals totaling $6 billion in proceeds. Next up was the life sciences sector, with 32 issues and $2.6 billion in volume. The largest IPO of the year was MetroPCS Communication, a Dallas-based wireless provider which raised $1.2 billion when it went public in April, making it the third-largest venture-backed IPO in history, according to the report.

Venture-backed mergers and acquisitions weren’t nearly as robust as IPOs in the fourth quarter; only 45 deals were done, the lowest volume since the first quarter of 1998. However, the year’s total of 304 venture-backed M&A deals represented a disclosed value of $23.7 billion, the highest annual tally since 2000, the report stated. What’s more, 43 percent of those deals returned more than four times the venture investment, compared to just 36 percent a year earlier.

“This past year was marked by improving quality of both venture-backed IPOs and M&A transactions,” NVCA president Mark Heesen said in a statement. “In the coming year, we would like to uphold that quality while increasing quantity on both exit fronts.” Heesen defined his targets for “an ideal year” as more than 100 venture-backed IPOs and 350-plus acquisitions.

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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