The exit slowdown and the new venture capital landscape

April 2008
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The exit slowdown and the new venture capital landscape: Findings from the MoneyTree report

At a glance

US trends in venture capital, IPOs and other strategic investments in 2008.

The proverbial IPO window lifts, falls, then lifts again. Veteran venture capitalists have lived through such cycles, but few have seen the window shut as completely as it did this year.

In the second quarter of 2008 there were zero VC-backed exits—on the heels of five in the previous quarter, which raised a thin $283 million. In the first half of 2007, by comparison, 43 VC-backed IPOs collected $6.3 billion. When the last VC-backed IPO shutout hit, in 1978, “Stayin’ Alive” topped the charts and Space Invaders ignited the video game market. The country was mired in recession and wading into its second oil crisis.

Nearly two months into Q3 2008, the window nudged open for two cleantech debuts—desalination company Energy Recovery and solar-cell equipment supplier GT Solar—suggesting that cleantech IPOs may very well lead an IPO recovery. When the window does reopen, it may reveal an altered VC landscape, one shaped partially by the exit slowdown.

This paper is based on findings from the MoneyTree Report , a quarterly survey produced by PwC and the National Venture Capital Association, based on data provided by Thomson Reuters.