California Business Minute™

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Hi, I am Tim Johnson and welcome to the California Business Minute.

The pace of U.S. venture capital investments remained steady at $7.4 billion
during the second quarter even though there were no initial public offerings of
start-ups for the quarter.

The amount of money spread across 990 deals in the April-June period was
unchanged from the same time last year, according to figures released by the
National Venture Capital Association, PricewaterhouseCoopers and Thomson
Reuters.

The lack of inaction has made it increasingly difficult for the financiers of new
ideas to cash out of startups. Just five startups funded by venture capitalists have
completed IPO’s this year and none of them made their stock market debut in the
second quarter. This is the first time in 30 years that an entire quarter has passed
without at least one initial public offering by a venture-backed startup.

To make matters worse, fewer buyers appear interested in acquiring startups. Through
the first half of the year, the number of acquisitions involving startups backed by venture
capitalists had dropped by 28 percent from last year, according to the National Venture
Capital Association, a trade group.

The lack of interest is forcing venture capitalists to pour money into older startups for
longer periods than they anticipated while also depriving them of a chance to realize a
gain from their earlier investments. Meanwhile, entrepreneurs trying to raise money for
their first time are having a tougher time.

I am Tim Johnson and this has been the California Business Minute.