The downtrodden venture-capital industry is slowly reviving as large companies feel comfortable enough to sift through start-ups for a coveted diamond in the rough. The renewed activity is stirring up the initial public offering (IPO) market and its related exchange traded fund (ETF).
However, some venture capitalists caution that current deals are confined to high-growth or profitable technology and biotechnology start-ups, writes Pui-Wing Tam for The Wall Street Journal. Nevertheless, deals are being drawn out at a quicker pace, with 15 companies backed by venture capital changing hands last week alone. [U.S. IPO Activity Puts Spotlight on the IPO ETF.]
So far this year, 14 venture-backed start-ups have gone public, compared with eight in 2009 and seven in 2008.
In the first quarter, acquisitions of venture-backed start-ups provided $3.9 billion, up $3.4 billion year-over-year, and venture-backed IPOs brought in $710.8 million as compared to nothing a year ago. The software sector experienced the most deal activity, with 28 out of 77 venture-backed acquisitions in the first quarter. [How the ETF Works.]
For more information on initial public offerings, visit our IPOs category.
- First Trust IPOX-100 (NYSEArca: FPX)
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.