Internet Deals Lead Exit Markets To Solid Second Quarter With Valuations Higher

Exits markets for venture-backed startups turned in a solid second quarter with IPO dollar volume setting an 11-year record and the number of M&A transaction moderating slightly.

For both venture-backed acquisitions and IPOs, deal size grew impressively, suggesting higher valuations are in the card for portfolio companies.

Internet deals paved the way for the upbeat performance, according to data release Friday by the National Venture Capital Association and Thomson Reuters, publisher of peHUB. Internet specific deal made up half of all IPOs and more than a quarter of acquisitions.

For the three-month period, 22 venture backed startups competed IPOs, raising $5.5 billion, with an average offer size of $248 million, the report said. This compares with 17 in the year ago second quarter and 14 in the first quarter of 2011. In last year’s second quarter, deal value came to just $1.3 billion. Fourteen of the offerings were from U.S. while five companies were from China.

Internet deals raised a good chunk of the money, or $3.5 billion, and deal volume was the strongest since the third quarter of 2000. The total was helped by the IPO of Russian-based Internet company Yandex, which raised $1.3 billion and became the second largest Internet IPO on record behind Google.

Forty-six U.S.-based venture-backed companies are on file to go public.

Quarterly M&A deals fell to 79 from 123 in the first quarter, according to the survey. Yet the average value of those deals with a disclosed value was $150 million, up 24% from the first quarter.

Along with Internet transactions, computer software and services deals were strong.