This is another one on top of the bad news list and regards to “oil” which makes up part of the economies function (at least in US): venture capital.
National Venture Capital Association reports (according to Reuters) that in Q4 the fundraising dropped about 71% from the same period in 2007 (3.8 billion vs. 11.7 billion in Q4 2007) and a substantial decline comparing with Q3 2008.
For the whole year 2008 the funds raised were in amount of $28 billion comparing with the year prior ($35 billion).
The champions of venture capital funds in 2008 are Sequoia Capital ($929 million raised), Austin Ventures ($900 million raised), Essex Woodlands Health Ventures Fund ($892 million raised). There were 18 funds that raised worth $500 million or more.
There were only six IPO exits last year (the worst in 30 years), 260 M & A transactions (the worst in 5 years).
The largest IPO of 2008 was Rackspace Hosting ($187 million). All but one of 2008 IPOs are trading below their offering price.
The largest M & A transaction of the year 2008 was EqualLogic, Inc, a developer of storage area network solutions, which was purchased by Dell, for $1.4 billion in January (the largest of the Q4 was the purchaing of Bill Me Later, online payment solutions provider, by eBay – $945 million).
As it looks now, the trend could continue in 2009 also until the exit markets re-open and the pipeline is cleared. Let’s hope that pipeline is cleared sooner rather than later.
How are the things in Europe?