Is Strong IPO Market Momentum Benefiting VC Backed Companies?

February 18, 2011 at 5:50 pm Leave a comment

PwC just released its US IPO Watch which tracks IPO activity on US stock exchanges. According to PwC, “…the surge of activity in the fourth quarter of 2010 confirms the IPO market has recovered from the doldrums of 2008 and 2009.” According to PwC 2010 has seen 154 completed IPOs that have raised $37.5 billion through December 14th, representing “… a 123 percent increase in volume and 49% increase in value compared with the $25.2 billion raised from 69 IPOs in 2009.” PwC also sees strong momentum indicating 30 companies registered for IPOs in the fourth quarter while only 2 offerings were withdrawn, which signals “…a significant improvement and increasing confidence from issuers and investors…”

See for PwC’s IPO resources page. Here is the link for their press release.

How does this compare with what the VC industry is reporting? We do not have Q4 2010 results yet, but for the first nine months of 2010, the National Venture Capital Association (NVCA) together with Thomson Reuters reported that 40 of the IPOs were by venture capital (VC) backed companies. Of these companies, 21 were in computer hardware or software, semiconductors, communications, or Internet services, 11 were in biotech, medical technology, or health services, and 8 were in other categories. Overall, it appears as if VC backed companies represent about 25% of the number of IPOs.

This level of IPO activity is an improvement compared to the previous seven quarters (from April 2008 through December 2009) when there were just 13 IPOs by VC backed companies. However, it is still only half the number of IPOs by VC backed companies in 2007.

So clearly, VC backed companies are playing an important – but not dominant role is the US equity markets.

Source: News Release series by National Venture Capital Association (NVCA) and Thomson Reuters dated April 1, 2010, July 1, 2010, and October 1, 2010. NACVA’s study results may be found at

Bill Denebeim is a Vice President of The Brenner Group and has more than twenty years experience providing financial, regulatory and operational consulting services to executive management and investors of technology companies. Bill received his M.S. in Operations Research from Stanford University and his B.A. degree in Economics and English from the University of California at Berkeley. Bill is a holder of the Chartered Financial Analyst® designation and is a member of the CFA Institute and the CFA Society of San Francisco.

Read more about Silicon Valley news, trends, and commentary in The Brenner Banner.

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Entry filed under: Financial Advisory, Interim Management, Restructurings, Shareholder Services, Valuations.

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