FIGURE 2 U.S. Private Equity Returns (1974-2006). SOURCE: Venture Economics.

FIGURE 2 U.S. Private Equity Returns (1974-2006). SOURCE: Venture Economics.

Susan Woodward, owner of Sandhill Econometrics, presented results from a proprietary set of data on approximately 20,000 venture backed firms extending back to the late 1980s—virtually the universe of such companies from the point at which they received their first round of venture funding, including those that failed and exited the market by shutting down altogether—nearly one-third of the total number of firms. Woodward’s quarterly data through early 2007 (Figure 3) show fluctuating but increasing IPO activity throughout the 1990s followed by a steep drop after the 3rd quarter of 2000, failing to recover even to the level of early 1991. Meanwhile, the number of acquisitions also grew steadily through the 1990s, peaked in 2000 and 2001 but remained quite robust through 2007. (Figure 4)

William Janeway, a partner in Warburg Pincus, presented similar data from another source showing the rise and fall in the annual number of venture backed IPOs between 1980 and 2007, and also suggesting that the median firm age at the time of going public has crept up since 2001 relative to the 1990s. (Table 1)



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