The market for initial public offerings continued to accelerate in the third quarter as 26 venture-backed companies started trading on the public markets, more than double the totals for the same period last year. In fact, the report by Thomson Reuters and the National Venture Capital Association indicated that Q2 and Q3 marked the first consecutive quarters of more than 20 IPOs since the fourth quarter of 2004.
And things could accelerate in the future with Twitter’s plans to go public, as well as social gaming powerhouse King. Interestingly, 16 of the 26 venture-backed companies that went public during the third quarter were in the biotech and life sciences sector. The biggest IPO was network security company FireEye, whose stock has more than doubled from its $20 offering price. It now has a value of $4.78 billion.
In Washington state, two Seattle area venture-backed companies have completed IPOs this year: Tableau Software — now with a market value of $4.3 billion — and NanoString Technologies — valued at $161 million.
M&A activity dropped among venture-backed companies compared to last year. The report tracked 107 M&A deals, compared to 125 during the third quarter of 2012. However, disclosed deal values increased to an aggregate of $4.9 billion.
“While the number of M&A deals this quarter remains below recent run rates, the jump in the value of the deals from Q2 2013 is encouraging. This is an indication that venture-backed companies – particularly in IT – are attracting increased interest from strategic buyers, weighing all options, and holding out for better terms,” said John Taylor, head of research for NVCA. “On the IPO side, favorable public market conditions and stronger valuations are contributing to better quality IPOs for venture-backed companies as evidenced by the jump in dollars raised on the public markets. However, we are still well below ideal levels as VCs are still investing at greater rates than they are exiting those investments.”
