Only one venture-capital-backed start-up went public in the three months ending Sept. 30, raising a paltry $30 million, as investors continued to shy away from tech offerings and venture capitalists looked for other ways to sell their investments.
Meanwhile, sales of start-ups to other companies remained steady. In the third quarter 70 companies were sold for a total disclosed value of $1.8 billion. That's down slightly from the second quarter, when 77 companies were sold for a disclosed value of $1.96 billion, according to the National Venture Capital Association, an industry trade group, and the research firm Thomson Venture Economics.
Both the number of deals and their disclosed value have dropped from the third quarter of 2001, when 88 companies were sold for $3.72 billion.
The level of activity in acquisitions and IPOs, the two most common ways for venture capitalists to sell their investment stakes in start-ups and return profit to investors, remains well below the highs of years past. During the Internet investment boom, venture capital firms reaped enormous gains by selling shares in their investments to the public through initial public offerings.
Acquisition activity peaked in the first quarter of 2000, when 93 companies were sold for a disclosed value of $23.81 billion. In that same quarter 76 venture-backed companies went public, raising $8.28 billion. The average offering was $109 million. In the second quarter of this year the average offering was $105 million, compared with $30 million in the third quarter.
About 40 percent of the acquisitions involved software companies, a rate similar to earlier quarters.
In the Washington area, five venture-backed companies were acquired in the third quarter. The largest deal was the $145 million purchase of Alexandria network security firm Riptech Inc. by Symantec Corp., which also bought Mindsurf Inc. of Baltimore for $1.8 million. The three other local companies acquired in the third quarter were Washington-based Jstreetdata.com Inc., bought by NFO WorldGroup Inc.; eLink Communications Inc. of Bethesda, purchased by EurekaGGN; and Clarius Technologies Inc. of Rockville, bought by Marligen Biosciences Inc. The value of these deals was not disclosed.
HealtheTech Inc., a Golden, Colo.-based maker of medical devices and software, was the only venture-backed IPO. The company raised $30 million in July.