Report: VC Industry in Midst of Worst Liquidity Drought on Record

Authored by Mark Hefflinger on April 1, 2009 - 8:36am.

San Francisco - The U.S. venture capital industry is suffering through its worst liquidity drought on record, with not a single venture-backed company completing an initial public offering (IPO) in nearly eight months, according to new statistics from Dow Jones VentureSource.

During the first quarter, venture capitalists managed to generate just $3.2 billion in liquidity through mergers or acquisitions of 68 portfolio companies, a 65% drop from the $9.1 billion in liquidity generated in the first quarter of 2008 and the lowest quarterly total since 2003.

"The most disturbing part about these new liquidity figures is that we've already reached the lows seen after the dot-com bust and we may not be at the bottom yet," said Jessica Canning, the global research director for VentureSource.

"The IPO market is totally closed and there's just no clear indication right now that it will revive any time in the next quarter or two, even with 43 companies currently in registration."

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