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Startup hedge funds, private equity funds and venture capital funds in Canada are struggling to raise money. (MARK BLINCH/MARK BLINCH/REUTERS)
Startup hedge funds, private equity funds and venture capital funds in Canada are struggling to raise money. (MARK BLINCH/MARK BLINCH/REUTERS)

Venture-backed IPOs gather steam in U.S. Add to ...

Bolstered by soaring U.S. equity markets, venture capital-backed IPOs kicked off 2012 with a roar. During the first quarter, 19 companies went public south of the border, raising $1.5-billion (U.S.), the highest first quarter total in five years.

The first quarter total was 10 per cent higher than the same period 2011, when confidence surged before the commodity bubble burst. And while the 10 per cent gain isn’t a massive increase, the historical data set, provided by Thomson Reuters and the National Venture Capital Association, show that venture-backed IPOs are really picking up.

Back in 2009, these IPOs raised just $1.6-billion for the full year. In 2010, that amount jumped to $7.4-billion, and last year it hit $9.9-billion. If the second quarter of 2012 can keep up with first, the full year total could jump even higher.

The growing market is excellent news for venture capital backers. Once they invest, they only ways they can cash in on their investments is if the companies go public, or get bought. And IPOs are needed right now because M&A involving venture-backed firms isn’t so hot right now -- likely because valuations are multiplying extremely quickly.

The largest first quarter venture-backed IPO came from ExactTarget (ET), an interactive marketing company based in Indianapolis, which raised $161.5-million. IT IPOs were by far the dominant sector, accounting for about two-thirds of the quarter’s total. Within this sector, internet specific companies dominated, which is no surprise.

 

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