Venture-backed exits rise in 3rd-qtr, politics dampen outlook

Tue Oct 2, 2012 5:40pm EDT

* Ten venture-backed IPOs raised $1.09 billion

* M&A deal volume totaled $7.6 billion for venture-backed companies

* "Fiscal cliff" creates uncertainty for current quarter

By Sarah McBride

SAN FRANCISCO, Oct 2 (Reuters) - The value of venture-backed initial public offerings and acquisitions grew slightly in the third quarter from a year ago, but political factors could weaken the current-quarter outlook, the National Venture Capital Association said.

Last quarter, 10 venture-backed companies raised a total of $1.09 billion through IPOs, up from five companies and $475.9 million a year earlier, according to data from Thomson Reuters and the NVCA released on Tuesday.

Ninety-six companies entered into merger & acquisitions, mostly as the target company, but in some cases as the acquirer. Terms were disclosed for 30 deals totaling $7.6 billion. In the 2011 third quarter, there were 145 deals, including 45 with disclosed values totaling $7.15 billion.

But a marked slowdown could occur in the current quarter because of uncertainty over the "fiscal cliff," said NVCA President Mark Heesen, referring to automatic spending cuts and tax changes that kick in next year if Congress does not act to stop them.

Three billion-dollar venture-backed M&A deals closed in the third quarter: VMWare's $1.26 billion purchase of network virtualization company Nicira Networks, Microsoft Corp's $1.2 billion acquisition of business software company Yammer, and Facebook Inc's $1 billion purchase of photo-sharing service Instagram.

In the largest venture-backed IPO of last quarter, firewall vendor Palo Alto Networks raised $260 million. Of the 10 IPOs, supply-chain platform company E2open's stock is the only one trading below its debut price, of $15 in July, at around $14.

Twenty-eight venture-backed companies have filed for future IPOs, excluding those that filed confidentially using Jobs Act provisions, the NVCA report said.

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