Survey Shows VC-Backed IPOs Hit 31-Year Low In ’08

1/5/09

Venture-backed companies are no doubt ready to put 2008 in the past. Year-end reports show a dismal number of initial public offerings and M&A deals last year, after a flurry of tech companies canceled plans to go public and buyout activity slowed to its lowest level in five years. 

Thomson Reuters and the National Venture Capital Association released their Exit Poll survey this morning, showing a scant six venture-backed companies completed IPOs in 2008. That’s the worst year for public offerings since an equal number of public debuts were recorded in 1977. Another tidbit of bad news is that five of those six companies are trading below their initial offering price.

The deal figures are similar to those reported Friday by Dow Jones VentureSource .

What’s more, there were two fiscal quarters without a single VC-backed IPO in 2008, which was the first year to have two quarters with zero IPOs since 1975. Forty venture-backed companies pulled their registrations for IPOs last year, another sign of the poor climate for public offerings. (We noted how slow IPO activity was in the Boston area last summer.)

The total number of venture-backed company M&A deals was 260, the first year since 2003 that the total was less than 300, according to the report. During the fourth quarter of 2008, M&A activity by sector was dominated by IT-related deals, which totaled 30, while life sciences and health care deals numbered just four, the report says.

There was only one venture-backed firm with ties to one of the three main markets covered here at Xconomy to appear on the report’s list of 2008 IPOs, Pennsylvania-based CardioNet (NASDAQ:BEAT), which has offices in its former home city of San Diego. (Apparently, Merrimack, NH-based GT Solar International (NASDAQ:SOLR) didn’t qualify as venture-backed, even though it completed an IPO last year.)

Here’s the NVCA and Thomson Reuters’ list of venture-backed IPOs in 2008:

— ArcSight (NASDAQ:ARST), a Cupertino, CA-based provider of compliance and security management software, completed a $61.8 million IPO.

— BioHeart (NASDAQ:BHRT), a Sunrise, FL-based biotech firm developing cellular therapies, had a $5.8 million maiden public offering. (Yep, that’s $5.8 million.)

— CardioNet (NASDAQ:BEAT), a provider of patient-monitoring software, wrapped up an $81 million IPO.

— IPC The Hospitalist Company (NASDAQ:IPCM), a provider of care services in hospitals, completed an $83.2 million IPO.

— MAKO Surgical (NASDAQ:MAKO), a Ft. Lauderdale, FL-based medical devices firm, raised $51 million in its public debut.

— Rackspace Hosting (NYSE:RAX), a San Antonio-based provider of IT services and Web site delivery, had the largest venture-backed IPO last year, valued at $187.5 million.

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