NEW YORK – The complete dearth of initial public offerings of stock by venture-backed companies and a paltry $3.9 million from mergers and acquisitions in the fourth quarter of 2008 helped make it the worst year for VC-backed liquidity events since 2003, according to Dow Jones Venture Source.

Overall, U.S. venture-backed companies generated $24.1 billion in liquidity through IPOs and M&As in 2008, down 58 percent from the $57.6 billion in liquidity produced in 2007.

Just seven companies completed public offerings in 2008, raising $551 million — a far cry from the $6.8 billion generated through the public listings of 76 companies in 2007 and the lowest totals recorded since VentureSource began tracking the industry in 1992.

After peaking in 2007 at a seven-year high of $50.9 billion, liquidity generated through the sale (M&As) of venture-backed companies fell 54 percent to $23.5 billion in 2008.

The median amount paid for a VC-backed company fell by half, from $90 million in 2007 to $45 million in 2008.

“2008 proved to be a very rough year for the U.S. venture capital industry,” said Jessica Canning, Global Research Director for VentureSource.

“With virtually no IPOs and corporations only making choice acquisitions, the liquidity markets have essentially been cut off for venture investors.

“Additionally, the ever-increasing amount of time it takes for a company to go public or get acquired is stretching out the lifecycle of venture funds and therefore returns to venture firms and their limited partners.”

On the Web: www.venturecapital.dowjones.com

© 2009, TechJournal South. All rights reserved.