US Start-ups Flee, IPO Action Below Bad Result Last Year

Is the US now in the business of exporting IPOs? According to research Dow Jones VentureSource, half of all venture-backed IPOs last quarter happened in other countries. Here are the five stats you need to know:

1. Barely double-digits: a mere 10 venture capital-backed US companies went public last quarter.

2. More on the way: the IPO pipeline is robust, and venture capital-backed companies are well represented. So far, 61 of them have filed to go public. 20-seven of them came in the past quarter.

3. Small money: the proceeds from the 10 US venture capital-backed companies that went public last quarter amounted to a paltry $505 mn. In the same quarter a year earlier, only nine US venture-backed companies went public, but the proceeds were 10 per cent higher.

4. Asia rising: half the companies going public last quarter did so on stock exchanges in Asia and Europe. During the first half of 2011, all 25 venture-backed companies went public on exchanges in the US.

5. Shorter runway: the median venture capital raised ahead of an IPO fell 49 per cent year over year to $26 mn. The time to a liquidity event dropped from 6.7 years to six years.

Jessica Canning, global research director for Dow Jones VentureSource, indicates in a statement that patience is a virtue, but the short runway and flight to international exchanges show that this virtue is in short supply. She says, ‘Cash-rich corporations will continue to spend cautiously until the global markets stabilise enough to provide assurance that their cash on hand is an unnecessary security blanket. Meanwhile, IPO candidates continue to file with hopes that the markets will stabilise or that they can find an exit overseas.’

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