Today the NVCA and Thomson Reuters released Q3 Exit Poll data.  Venture-backed acquisitions continued to show strength in the third quarter of 2011 with more than 100 transactions completed and disclosed valuations inching further upward from previously solid quarters.  Coming off a record year for the number of acquisitions completed in 2010, it would be reasonable to assume a slow down given the economic pressures being faced by our country.  Yet, not only is volume strong but returns are as well with a large percentage of disclosed transactions making 4x or greater.  All of this is welcome news as unfortunately the story is much different for venture-backed IPOs.

We saw a closing of the IPO window immediately following the averted U.S. debt crisis and S&P downgrade, with the last offering taking place in mid-August.  Since that time, venture backed companies continue to register, and we now have more than 60 waiting to go public, creating a pipeline we haven't seen this full in years.  However, good companies will not go public in bad markets and the substantial swings and daily instability have compelled many to wait it out.  With only 41 IPOs completed thus far in 2011, a full IPO recovery will be elusive this year.

While a strong acquisitions market supports venture industry performance, it is imperative that the IPO market improve to help sustain the historical return levels limited partners are seeking.  Furthermore, a robust IPO market is critical for long-term US economic growth and job creation.  We at the NVCA continue to work towards a policy environment that supports a stronger capital markets system for emerging growth companies.  This, combined with greater market stability, will go a long way towards recovery.