The second quarter of 2008 has been dry for Venture Capitalists. No IPOs, only very few M&A exits. Actually just one is Biotech: the acqusition of Xanthus Pharmaceuticals by Antisoma plc for $ 53 million.
If we include the first quarter of 2008, there were only 5 venture backed IPOs yielding a meager $ 283 million, versus $ 6.3 billion for 70 million in the fisrt half of 2007. Disclosed Venture backed M&A deals went from 169 down to 120 and the total investor value from $ 8.5 billion down to $ 6 billion during the same period. This is a 42% drop in deal value.
It is unclear how long the Tech Crunch will last. For some sectors , bootstrapping or reaching out to angel investors may be a way to get started. It is much more concerning for new ventures in the Biotech sector, which require more capital and have a longer road to revenues. Let’s hope that VCs will look beyond the short term economic outlook and remember that most Biotech investments require a 5+ year vision, long enough for a turnaround of the economy.
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