Not one single VC backed company went public in the 2nd quarter of 2008 according to the New York Times. The last time that happened was 30 years ago. However, 2007 was one of the best years for IPOs since the dot com bubble of 1999. Such are the cycles of VC investing and IPO exits.
| Investments | Returns | ||
| Year | VCs | M&A | IPO |
| 2001 | $32.1 | $16.8 | $3.5 |
| 2002 | $22.1 | $7.9 | $2.1 |
| 2003 | $19.6 | $7.7 | $2.0 |
| 2004 | $22.4 | $15.4 | $11.0 |
| 2005 | $23.7 | $16.0 | $4.5 |
| 2006 | $25.5 | $17.1 | $5.1 |
| 2007 | $29.4 | $25.4 | $10.3 |
| Totals | $174.8 | $106.3 | $38.5 |
Fear is temporary, greed is permanent. We are in a "fear" cycle now. There is fear in the public IPO markets due to slow growth, high oil prices, and recession fears.
VCs continue to raise funds and invest aggressively. Last year VCs invested nearly $30 Billion, the most since 2001. VCs have a long term view. They don't expect their investments to pay off for at least 5 years, sometimes much longer.
Fred Wilson has an interesting post today that includes this 10 year chart of the Dow Jones Industrial Average for the 1970s.
The Dow tanked in 1974 when OPEC put on an oil embargo that caused wide spread shortages and gas prices to sky rocket. The 70s were a dismal decade for business and investing. The Dow hovered around 900 and hit 1,000 just twice in the decade. It is hard to imagine now with the Dow around 12,000, but we have seen massive swings, up and down, in the 30 years since the last oil crisis.
Is this IPO market "goose egg" a one time thing? Will M&A transactions remain strong? What do you think?
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