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VC exit activity remains strong despite rising valuations
U.S. VC exit activity has slowed this year. 2014 exits harkened back to the dot-com days, though last year’s total was partially skewed by the massive $22 billion sale of WhatsApp. Absent that deal, 2014 was still a post-2000 record by both count and value, so a slowdown isn’t surprising. What has changed over the past five years is the sheer number of exits happening, topping out at 986 last year. Through 1H, 2015 totals aren’t too far behind at 427, and capital exited levels should compare favorably to prior years, as well.
IPO activity, on the other hand, is well off last year’s pace. 121 VC-backed companies went public in 2014 versus only 42 companies through June of this year. Market volatility will likely dictate IPO activity through the rest of the year, though the number of still-private unicorns hints at stronger IPO numbers—at some point. Until then, acquisitions remain the exit of choice for VC, with another 385 sales finalized in 1H totaling $23 billion in value. M&A made up 90% and 85% of VC exit counts and value, respectively, through the first half.
Large exits ($500M+) accounted for the lion’s share (58%) of total capital exited in 1H, down slightly from 63% in 2014. Most years going back to 2006 saw $500M+ exits account for 40% or less of total exit value, and sometimes as little as 21% (in 2009).
This article is an excerpt originally posted on ValueWalk.