For the first time in 30 years, there were no venture-backed initial public offerings in the second quarter of the year, according to the Exit Poll report by the National Venture Capital Association (NVCA) and Thomson Reuters. The lack of any venture-backed IPOs in the second quarter of 2008, combined with just five venture-backed firms going public in the first quarter of the year, is being characterized by the NVCA as a "capital markets crisis for the start-up community." By comparison, 43 venture-backed companies went public in the first half of 2007.
"This situation represents a serious problem that will have long-reaching economic implications if not addressed," says Mark Heesen, NVCA president. "We view this quarter as the canary in the coal mine." Heesen points out that successful IPOs are a "job-creation engine" for the economy "and that engine has completely shut down."
In surveying its member venture capitalists, the NVCA learned that:
- 81% do not see the IPO window opening in 2008.
- 77% say skittish investors are the largest factor behind the IPO drought.
- Two-thirds believe that venture-backed companies are less inclined to go public than they were three years ago.
According to the NVCA, as of June 30, 2008, there were 42 venture-backed companies that had filed for an IPO with the SEC and were "in registration."