Breakingviews | Fixing the VC business

Considered view

03 Jul 2008 15:18

Too rich for their money

Context News

For the first time since 1978, there were no venture-backed IPOs during the second quarter. The National Venture Capital Association described the situation as “concerning enough to be characterized as a capital markets crisis for the start-up community.”

The 844 VC firms in the US brought six IPOs to the market in the first half of 2008, down from 37 last year, according to VentureSource. And in the second quarter, there were 56 venture-backed M&A deals, compared to 97 from the same time a year ago.

VC firms are stuffed with cash they can't put to work. The IPO market is the worst since 1978 and venture-backed M&A is down over 40% from last year. The flailing economy isn’t solely to blame. It's time to return money to investors.

Sign up to read the rest of this subscriber-only content, or if you are already a member please sign in here.

Forgotten your password? Get a password reminder.

This Views Flash will shortly be followed by a Considered View