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Venture Capital-Backed Exits - October 2013

by Jonathan Parker

  • 18 Oct 2013
  • PE

Q1 to Q3 2013 saw 597 venture capital-backed exits globally, valued at a total of $40.3bn. This represents the highest number and the second highest aggregate value of exits for the first three quarters of any year in the period from 2008 - present. Although the aggregate value of exits in the first three quarters of 2012 reached $45.7bn, this figure would stand just below $30bn without the contribution of Facebook’s $16bn initial public offering in May 2012.

In the year to date there have been 659 venture capital-backed exits in total, which already eclipses the 446 and 469 exits in 2008 and 2009, respectively. The total number of exits so far in 2013 is also close to surpassing the 691 and 675 witnessed in 2010 and 2011, respectively, although remains some way off the total of 763 exits in 2012. In terms of aggregate value, 2013 has so far witnessed $46bn of venture capital-backed exits globally. This is already far higher than the activity witnessed in 2008 and 2009, which saw $21.7bn and $27.6bn of exits, respectively. Although the 2013 global aggregate exit value to date has already surpassed that of the whole of 2010, which saw a total of $37.9bn, it has not yet reached the levels of 2011 and 2012, with $54.4bn and $58.9bn, respectively.

The number of exits has, for each year since 2008, been highest in the US. The proportion of the global number of venture capital-backed exits that occurred in this country fluctuated between 72% and 74% in the period 2008-2012 but has fallen to 69% for the year to date. Similarly, although the proportion of the global aggregate value of exits occurring in the US rose from 82% in 2008 to 87% in 2012, the year to date has seen just 73% of the global aggregate value of exits take place in this region. Meanwhile, Europe has seen a steady decline in the proportion of the global number of venture capital-backed exits, from 19% in 2008 to 15% in 2012, with 16% of exits globally in the year to date. The proportion of the global aggregate value of exits has been somewhat more erratic, rising from 9% in 2008 to 13% in 2009, before falling back to 6% in 2012 and returning to 13% in the 2013 so far.

Trade sales remain the most common exit route for venture capital firms, accounting for 68% of the number and 77% of the global aggregate value of exits in the year to date. IPOs comprised 12% of the number of exits and 15% of the aggregate value in 2013 so far. Despite their continued prevalence as a form of exit from venture capital investments, trade sales have seen a recent decline in prominence with 88% of the number and 93% of the aggregate value of exits coming via this route in 2008, but just 73% of the number and 56% of the aggregate value in 2012. However, the proportion of the aggregate value of exits attributable to trade sales in 2012 rises to 76% if we once again strip away the effect of Facebook’s IPO.

The largest venture capital-backed exit in the year to date was the $2.5bn acquisition of ExactTarget, Inc. in June 2013, by Salesforce.com. ExactTarget was backed by the likes of Battery Ventures, Scale Venture Partners and Technology Crossover Ventures.

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