SAN FRANCISCO A little stability would go a long way in reviving the pace of initial public offerings, the head of the National Venture Capital Association trade group said on Monday, predicting a good 2013 for U.S. start-up companies and their investors.
The U.S. presidential election, and concerns about tax hikes and other issues known as the fiscal cliff have depressed venture capital recently, NVCA President Mark Heesen said in an interview.
"If we get through some of these major hurdles and we see a stock market that is going to be stable for more than a couple of days ... I think that we could see a very solid IPO market, particularly in the second and third quarters of 2013. And the same goes for the acquisitions market," he predicted.
Corporations have been buying "companies they have to buy" not "companies they'd like to buy", but they are just waiting for market stability to expand their activity, he added.
Venture capitalists make early investment in young companies, typically making big enough returns from a small portion of a portfolio to justify the effort. The NVCA is a trade group of more than 400 members, which advocates for the industry and tracks its growth.
There were 52 venture-backed initial public offerings in 2011, down from 77 in 2010, according to Thomson Reuters/NVCA data, and Heesen predicted 2012 would have a little over 50. Next year and 2014 both could produce 75 to 110 IPOs, respectively, Heesen said. "It certainly is possible. Hopefully it's probable."
The Facebook initial public offering this year was a success for early investors, despite criticism about the IPO process. Heesen said the concerns related to Facebook had quieted down.
Acquisitions, which totaled 506 in 2011, likely would be around 350 this year and rise to 400 next, with "quality" sales - which made money for investors - increasing as well.
The industry invested about $27 billion or $28 billion this year in young companies, and Heesen predicted some improvement. "If we see growth, which I think we will see, it will be moderate growth, so you know, maybe we'll hit $31, $32 (billion)," he said.
(Reporting By Peter Henderson; Editing by Bernard Orr)