CONTACTS
Emily Mendell Joseph Christinat
NVCA Thomson Reuters
1.610.565.3904 1.646 223 6798
emendell@nvca.org joe.christinat@thomsonreuters.com
VENTURE-BACKED IPO DROUGHT CONTINUES IN THE THIRD QUARTER OF 2008
Capital Market Crisis for Start-Up Community Remains
New York, New York, October 1, 2008 – Venture-backed company exits continued to lag
in the third quarter of 2008, according to the Exit Poll report by Thomson Reuters and the
National Venture Capital Association (NVCA). There was just one venture-backed IPO in
the quarter, and the tally of M&A exits as of the last day of the quarter came to a modest
58 transactions for the period. In the first three quarters of 2008, there have been just 6
IPOs of venture-backed companies, representing the lowest volume for the first three
quarters of the year since 1977.
\"The crisis in the financial markets has further exacerbated an already troubling situation in
that most venture-backed companies are postponing or abandoning an IPO exit for the
foreseeable future,\" said Mark Heesen, president of the NVCA. \"Additionally, the lower
M&A transaction volume can be attributed to the expected uneasiness of large
corporations who are exercising more caution in their acquisition strategies of venture-
backed companies until market conditions become more auspicious.”
Mr. Heesen went on to explain how exit market conditions will impact the venture capital
industry in the foreseeable future.
“These companies that are ready to exit are very strong, with positive earnings as well as
innovative technologies and business models, so they will remain in the venture capital
portfolio until conditions improve,” he said. “Should the current situation be prolonged into
2009, we can expect fewer new investments by the venture industry as they will need to
spend their time with these later stage companies that are waiting to go public or be
acquired.\"

Page 2 of 5
October 1, 2008
Venture-Backed Liquidity Events by Year/Quarter, 2002-2008ytd
*Total
M&A Disclosed *Average Total Average
Deals with M&A M&A Offer IPO Offer
Total
Disclosed Deal Size Amount Amount
M&A Value **Number
Quarter/Year Deals Values ($M) ($M) of IPO's ($M) ($M)
2002 318 154 7,586.7 49.3 22 2,109.1 95.9
2003 284 119 7,460.1 62.7 29 2,022.7 69.8
2004 345 187 15,919.6 85.1 94 11,378.0 121.0
81 45 4,351.9 96.7 10 720.7 72.1
2005-1
81 34 4,725.0 139.0 10 714.1 71.4
2005-2
102 48 5,739.5 119.6 19 1,458.1 76.7
2005-3
87 39 2,594.0 66.5 18 1,592.1 88.5
2005-4
2005 351 166 17,410.6 104.9 57 4,485.0 78.7
107 52 5,607.5 107.8 10 540.8 54.1
2006-1
106 40 4,018.5 100.5 19 2,011.0 105.8
2006-2
94 42 3,450.8 82.2 8 934.2 116.8
2006-3
62 26 5,616.8 216.0 20 1,631.1 81.6
2006-4
2006 369 160 18,693.6 116.8 57 5,117.1 89.8
83 29 4,540.3 156.6 18 2,190.6 121.7
2007-1
86 36 3,972.3 110.3 25 4,146.8 165.9
2007-2
102 52 10,810.0 207.9 12 945.2 78.8
2007-3
88 43 9,084.1 211.3 31 3,043.8 98.2
2007-4
2007 359 160 28,406.7 177.5 86 10,326.3 120.1
70 28 3,602.4 128.7 5 282.7 56.6
2008-1
71 21 4,150.9 197.7 0 0.0 0.0
2008-2
58 24 3,512.6 146.4 1 187.5 187.5
2008-3
2008 199 73 11,265.9 154.3 6 470.2 78.4
Thomson Reuters & National Venture Capital Association
*Only accounts for deals with disclosed values
**Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges, regardless of domicile.
IPO Activity Overview
There was just one venture-backed IPO in the third quarter of 2008, following the second
quarter when there were no issues. The one issue brought to market represents the
largest deal of the year. Valued at $187.5 million, the offering came from Texas-based
company Rackspace Hosting, provider of website development, Web-based IT systems,
and computing as a service.

Page 3 of 5
October 1, 2008
In addition to the U.S. market activity, two companies that received US venture financing
went public on foreign exchanges in the third quarter.
As of September 30, 2008, 1/3 of the venture-backed companies that went public during
2008 were trading above their offering price.
Thirty-eight venture-backed companies are currently filed for an initial public offering with
the SEC. This level falls short of 2Q 2008 when 42 venture-backed companies were in
registration. Additionally, 28 venture-backed companies have withdrawn from registration
in the year-to-date period.
Mergers and Acquisitions Overview
As of the last day of the third quarter of 2008, 58 venture-backed M&A deals were
reported, 24 of which had an aggregate deal value of $3.5 billion. The average disclosed
deal value for the quarter was $146.4 million.
The Information Technology sector dominated the venture-backed M&A landscape, with 38
deals and a disclosed total dollar value of $1.7 billion. Within this sector, Computer
Software and Services companies accounted for the bulk of the target companies, with 19
transactions across this sector subset. Non-High Technology saw the next highest level of
activity with 14 deals and a combined disclosed value of $1.3 billion. Finally, Life Sciences
deals accounted for six exits with disclosed values of $466.2 million.
Venture-Backed M&A Industry Breakdown
Q3 2008
Number
of
Total
Venture-
Number Backed Disclosed
Venture-
of M&A
Backed
Venture- deals
Backed with a Deal
Value
M&A disclosed
Industry ($M)
deals value
Communications and Media 6 3 639.9
Internet Specific 9 4 250.8
Computer Software and Services 19 7 681.3
Semiconductors/Other Elect. 2 2 106.0
Computer Hardware 2 2 41.5
Information
Technology TOTAL 38 18 1,719.5
Biotechnology 5 2 166.2
Medical/Health 1 1 300.0
Life Sciences TOTAL 6 3 466.2
Non-High
Other Products 6 1 180.5
Technology
Consumer Related 3 1 290.0
Industrial/Energy 5 1 856.4

Page 4 of 5
October 1, 2008
TOTAL 14 3 1,326.9
TOTAL 58 24 3,512.6
Source: Thomson Reuters & National Venture Capital Association
The largest transaction of the quarter was the acquisition of energy company APT
Generation by International Power PLC. The transaction, valued at $856.4 million, was
completed in July.
Despite lower volumes, the quality of disclosed deals remains steady. Deals bringing in
the top returns, those with disclosed values greater than four times the venture investment,
accounted for 54 percent of the total compared to 50 percent last quarter. Those deals
returning less than the amount invested accounted for 17 percent of the quarter’s total,
compared to 33 percent of the total last quarter.
Analysis of Transaction Values versus Amount Invested
Relationship between transaction value and Q208 Q308
investment M&A** M&A**
Deals where transaction value is less than total
6 4
venture investment
Deals where transaction value is 1-4x total
3 7
venture investment
Deals where transaction value is 4x-10x total
5 9
venture investment
Deals where transaction value is greater than
4 4
10x venture investment
Total Disclosed Deals 18 24
Source: Thomson Reuters & National Venture Capital
Association
** Disclosed deals that do not have a disclosed total
investment amount are not included.
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Page 5 of 5
October 1, 2008
About National Venture Capital Association
The National Venture Capital Association (NVCA) represents approximately 460 venture
capital firms in the United States. NVCA's mission is to foster greater understanding of the
importance of venture capital to the U.S. economy and support entrepreneurial activity and
innovation. According to a 2007 Global Insight study, venture-backed companies
accounted for 10.4 million jobs and $2.3 trillion in revenue in the United States in 2006.
The NVCA represents the public policy interests of the venture capital community, strives
to maintain high professional standards, provides reliable industry data, sponsors
professional development, and facilitates interaction among its members. For more
information about the NVCA, please visit www.nvca.org.