Counting Coups: Better, Fewer Deals in 2011 for Venture-Backed Cos.

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2011 was a year of bigger deals and fewer exits for venture-backed companies, according to data being released today by Dow Jones VentureSource.

VentureSource says that venture-backed companies netted $53.2 billion through a total of 522 deals of all kinds in 2011—mergers, buyouts, and IPOs. That was a 14 percent decline in the number of deals, and a 26 percent increase in capital raised when compared to 2010.

The median price paid for a venture-backed company was $71 million in 2011, a 77 percent gain over the median price of venture-backed M&A and buyout deals in 2010. VentureSource says companies raised a median of $17 million in venture financing to reach an M&A or buyout deal, which was a 12 percent slide from 2010.

The financial information service says 45 venture-backed companies raised $5.4 billion through initial public offerings in 2011. That’s significantly more capital than the $3.3 billion that 46 venture-backed companies raised in 2010. But the difference is due mostly to two IPOs in 2011, Groupon and Zynga, which together raised $1.7 billion.

“The IPO market saw some gains through the first half of the year, but the momentum was not strong enough to survive the volatility in August,” says Zoran Basich, editor of Dow Jones VentureWire, in a statement released today. “During 2012 we’ll get a sense of whether the last two years of flat IPO activity is the new normal for the industry or if there’s room to grow.”

During the fourth quarter of 2011, 10 IPOs raised $2.4 billion. Currently, 60 U.S. venture-backed companies are in IPO registration. Thirteen of those companies filed during the fourth quarter.

Connecticut-based Renaissance Capital, which tracks all IPOs, says 24 Internet companies went public in 2011—the highest number in a decade.

Renaissance Capital also counted 260 IPO filings in 2011, just one less than the 259 IPO registrations filed in 2010. But Renaissance also notes that 67 companies withdrew their IPOs in 2011, which is the second-highest number of withdrawals since 2003. The peak occurred in 2008, when 103 companies withdrew their IPOs.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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