Turmoil on the Street has created a bleak financial landscape for emerging biotech companies. Only four biotech and medical device firms backed by venture capital outfits went public in the first quarter, according to the National Venture Capital Association and Thomson Financial. A total of five venture-backed firms went public in the first three months, the worst record since the second quarter of 2003. Also, only 56 venture-backed companies merged or were acquired in the quarter, the worst performance since the late 90s.
"As far as we're concerned, the capital markets are closed until further notice," Paul Maeder, a partner with Highland Capital Partners, told the Wall Street Journal. Alain Harrus, a partner with Crosslink Capital in San Francisco, said the market turmoil has frozen deal-making activity.
But the roadblock being mounted to VC's exit strategies doesn't mean that the flow of VC money will stop or even slow very soon. Venture capital groups raised a whopping $34.7 billion last year, leaving them looking for promising emerging companiesÂ to back. And with IPOs on the wane, venture capital groups are looking more favorably on early-stage companies that are a long way from any market payday.
Dealmaking stays big even as the markets tremble. Report
Billion-dollar baby: Biotech still on a roll with VC funds. Report
Deal-making hits a faster pace in '07. Report
Top 20 VC deals of 2007. Report