The backlog of companies seeking to list grows amid a slow IPO market and lack of M&A, By Alex Irwin-Hunt, FDI Intelligence
The value of venture capital (VC) exit activity is on track to have its worst year since 2009 as tech investor appetite shifts to focus more on profits rather than the promise of future growth.
Only $32bn worth of VC-backed exits have been tracked so far this year according to PitchBook data up to 14 September, less than half the $76.5bn seen in the whole of 2022. This is also barely 4% the value of exits recorded at the peak of 2021, when VC funding reached historic highs before inflation and interest rates rose.
The number of VC-backed exits, which include listing via an initial public offering (IPO) and mergers and acquisitions (M&A), is also down significantly. Just 703 exits have been recorded so far in 2023, which is also lower than any other year since 2009.
“High interest rates, declining valuations and relatively low performance from tech companies in the public market during 2023 have left many VC-backed companies looking at a difficult IPO market,” write PitchBook analysts Kyle Stanford and Vincent Harrison in a third quarter 2023 note.