2011, analysts say, was a lousy year for IPOs.
Though optimism bloomed last spring after LinkedIn's skyrocketing debut, the global economy helped tamp down investor enthusiasm for initial public offerings of stock. That deep-sixed, at least for now, a return to the IPO fever last seen in Silicon Valley more than a decade ago.
Two reports released this week capture the sobering statistics. They show that while total dollars raised on the IPO market increased over the previous year, that was largely due to heavy-hitting debuts by Zynga, Groupon and a handful of others.
According to the annual Exit Poll report by Thomson Reuters and the National Venture Capital Association, 52 venture-backed companies went public during the year -- a 31 percent decline in volume compared with 2010.
Even though the number of IPOs perked up a bit in the year's final quarter, "We need at least double the offerings that we saw in 2011 to declare the market back on track," said Mark Heesen, president of the National Venture Capital Association,.
On the bright side, the year's IPOs raked in a collective $9.9 billion, which was a 41 percent increase over the previous year, Heesen's group said. Still, returns for the overall venture capital industry were subdued -- not just because the IPO wealth was concentrated in a relative handful of deals, but because the usual year-end surge in mergers and acquisitions didn't materialize.
New numbers from Dow Jones VentureSource paint an even more downbeat picture, tallying the IPO haul from venture-backed companies at just $5.4 billion. VentureSource and the NVCA use differing definitions for a "venture-backed deal," and it's not uncommon to see some differences between the two organizations' data.
But both agreed the numbers are disappointing.
"During 2012, we'll get a sense of whether the last two years of flat IPO activity is the new normal," said Zoran Basich, editor of Dow Jones VentureWire.
Adding to the concern for those hoping robust venture capital returns would lead to more wealth-producing investments, VentureSource found that for the first time in five years, acquisition activity in the fourth quarter didn't outpace the third quarter.
With the IPO bar set high in recent years, many venture firms have relied on M&A to provide a return on their investments in startup companies.
The median price paid in M&A deals did spike to $71 million, nearly double 2010's figure, VentureSource found. But when the year's venture-backed mergers, acquisitions, buyouts and IPOs are taken together, they tallied $53.2 billion -- 26 percent less total capital raised than in 2010.
"2011 was not a great year," said Sam Hamadeh, chief executive of New York-based PrivCo, which tracks financial data on private companies.
Things were better for tech companies that went public than for those in other industries. The NVCA's figures show that tech firms made up a third of the year's venture-backed IPOs and more than 75 percent of the dollars raised.
As further evidence of Silicon Valley's dominance, 20 of the 52 IPOs the NVCA counted were by companies based in California. The year's largest stock offering was by Russian search firm Yandex, which raised $1.3 billion in May before the global stock markets went sideways.
Yet, while Hamadeh credited the tech industry for a decent showing amid a tough economy, he said hype also played a big part.
New numbers compiled by his firm show that nearly half of the money raised in tech IPOs last year was raised by just four high-profile companies: Zynga, Groupon, LinkedIn and Freescale Semiconductor, a chip company based in Austin, Texas, that went public in May.
Only two of the year's 10 largest tech IPOs, as identified by Hamadeh, are currently trading significantly above their IPO prices: LinkedIn and Indianapolis-based Angie's List.
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