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IPOs, Mergers for Venture-Funded Companies Gain in 2010

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The number and value of exit deals — where enterprises backed by venture capital (VC) become financially self-sustaining — increased sharply in 2010, compared to 2009.  The compilation by Dow Jones VentureSource shows 514 exit deals took place in 2010 a 25 percent increase, with those deals netting $39.3 billion, a jump of 72 percent compared to 2009.

Both annual numbers for 2010 are still down, however, compared to pre-recession levels. In 2007, VC-backed companies recorded 613 deals, bringing in $69.1 billion.

The numbers of both main types of exit deals — initial public offerings (IPOs) and mergers & acquisitions (M&As) — increased in 2010. The 46 IPOs in 2010 represent more than a five-fold increase over the 8 IPOs in 2009. IPOs in 2010 brought in $3.4 billion compared to $903 million in 2009.

In 2010, 445 M&A transactions took place, a 17 percent increase, raising nearly $34 billion, a gain of 62 percent compared to 2009. While it took a little less time in 2010 for a VC-backed company to achieve liquidity through an M&A deal in 2010 — median of 5.2 years in 2010 compared to 5.5 years in 2009 — it took somewhat longer to get liquidity through an IPO. It took enterprises backed by VCs a median time of 8.1 years in 2010, up from 7.9 years in 2009.

Related: VC Mergers/Acquisitions Rebound, IPOs Drop in Q3 2010

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