NVCA Study: More IPOs, Please, Say Venture Investors

The National Venture Capital Association (NVCA) released the results of the 2011 Global Venture Capital Survey, and as many would predict, the #1 frustration for venture investors is the soft IPO market.

According to the survey, co-sponsored by Deloitte, more than 80% of venture capitalists around the world stated that their domestic IPO levels were too low, and in the U.S. 87% of venture capitalists believe that the current level of IPO activity is too low. This soft market has implications not only for the future success of the venture industry, but for the economy itself. “The recovery of the IPO market, both here in the U.S. and abroad, is not a nicety but a necessity for the future health of the global economy,” said NVCA president Mark Heesen.

The survey pointed to the not-surprising belief among venture capitalists that the returns generated by successful IPOs are critical to the success of the venture capital model, providing the greatest returns to venture investors and additional capital to venture-backed enterprises. The keys to those successful start-ups, according to the survey respondents, were: “a healthy investor appetite for equity in public companies” (92%), a stable economy (52%) and adequate stock analyst coverage (32%).

There were two bright spots in the survey results:

    1. More Funding For New Media and Healthcare: 64% of American VCs expect an increase in funding for new media and social networking, and 54% expected an increase in funding for healthcare services.

 

  1. More International Investing: 57% of venture capitalists investing outside their home countries said they plan to increase their activity over the next five years.

The survey also pointed to the continued importance of U.S. IPO markets, despite the globalization of the venture investment model. Of those surveyed, 91% believed the U.S. IPO market is a critical element of the venture capital industry, while only 36% of U.S. venture capitalists said that IPO markets outside the U.S. were critical to their success.

For a summary of the survey results, click here.

This post was authored by Caitlin Vaughn.

 
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