San Francisco - With no initial public offerings (IPOs) and just $3.9 billion generated through venture-backed mergers and acquisitions during the fourth quarter, 2008 was the worst year in terms of liquidity for U.S. venture capitalists since the post-tech-bust doldrums of 2003, according to a new report from Dow Jones VentureSource.

Overall, U.S. venture-backed companies generated $24.1 billion in liquidity through IPOs and M&A during the year, down 58% from 2007 levels. Seven companies completed IPOs, down from 76.

"With virtually no IPOs and corporations only making choice acquisitions, the liquidity markets have essentially been cut off for venture investors," said Jessica Canning, the global research director at VentureSource.

"Additionally, the ever-increasing amount of time it takes for a company to go public or get acquired is stretching out the lifecycle of venture funds and therefore returns to venture firms and their limited partners."

The largest M&A deal in the fourth quarter was eBay's $945 million acquisition of Bill Me Later.

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