Sunday, April 01, 2007

Venture investments summary 2007

SF Venture

In 2006, 58 venture-backed IPOs raised a total of $5.3 billion, up from $4.5 billion in 2005, according to Thomson Venture Economics and the NVCA. The 4th quarter of 2006 showed 21 IPOs.

M&A yielded $16.6 billion in 2006, up slightly from $16.1 billion in 2004. Average disclosed deal value for the year was $114 million in 2006, up from $96 million in 2005.

The year ended with a boost from Google’s $1.65 billion acquisition of YouTube. This transaction distorted the numbers in Q4, which showed a decline in the number of deals, but an increase in the aggregate value. Net returns from M&A continue to be mixed. Looking at Q4 of 2006, out of 23 deals, 7 returned more than 10x the amount invested, 8 returned more than 4x the investment, one 1x-4x, and 7 less than the amount invested.

What are the exit prospects for 2007? We see all the signs of a receptive IPO market. IPOs from Q4 mostly performed well in the aftermarket. Anecdotally, we understand there are at least a half dozen reasonably high profile technology IPOs in the pipeline for the first half of 2007, including NetSuite.