Liquidity is clearly improving in the venture capital market, making it easier for investors to cash out their investments.
During the third quarter, there were 111 venture-capital backed company exits, netting $6.4 billion. The number of exits rose by 11 percent while deal volume surged 70 percent compared to the same quarter a year ago, according to Dow Jones VentureSource.
Breaking down the source of deal-making, 102 venture-backed companies exited via a merger, acquisition or buyout and netted $5.7 billion. This was a five percent increase in the number of deals compared to the third quarter of 2009, and a 67 percent increase in deal value, from $3.3 billion raised.
In addition, nine initial public offerings raised $723 million in the third quarter, up from just two IPOs the prior year. But the amount raised rose just 60 percent, from $451 million in the same period last year.
For the full year to date, $17.74 billion worth of companies were sold by venture capital firms, up 75 percent from the comparable period last year, according to VentureSource.
"The exit markets have seen steady activity this year and solid gains over 2009's dismal numbers," said Jessica Canning, global research director for Dow Jones VentureSource.
She says private markets deal activity is benefiting from acquisitions by traditional corporate acquirers as well as venture-backed companies such as Facebook and LinkedIn which are making strategic acquisitions.
Further drilling down through the data, mergers and acquisitions accounted for the bulk of the activity--96 venture-backed exits and $5.1 million raised, an increase from the same period last year when 90 M&As raised $2.7 million.
Six venture-backed companies were bought by private equity firms for $568 million, one buyout fewer than the seven that netted $584 million during the third quarter of 2009.
The median amount paid for a venture-backed company in the most recent quarter was $27 million, 23 percent more than the third quarter of 2009.