In some ways, exits drive the venture industry by returning capital to LPs that can then be reinvested into the next wave of startups. That exit environment was particularly rocky in 2016, especially with regard to IPOs. Heightened acquisition prices may have held overall exit value high relative to past years, but there’s a staggering amount of capital left locked within the venture market.

Our 2016 Annual VC Liquidity Report features datasets within North America and Europe from the past decade to reveal trends that helped shape the industry.

Highlights:

  • 2016 exit count and value fell by 28% and 38% from 2014’s highs, respectively
  • The median acquisition size grew 40% year over year to a decade-high $56.3 million
  • Exits of $100 million+ accounted for more than 35% of VC-backed exits in 2016, the highest proportion we have tracked

Key Takeaways

  • Overall exit value ($61 billion) remained robust as a result of larger transaction sizes (median acquisition size grew 40% year over year)
  • $1 billion exits in Europe and North America slowed; more than 100 unicorns still yet to exit the private market
  • Software companies recorded 43.4% of completed exits; pharma and biotech exits accounted for 38.7% of total exit value

VC-Backed Exits Overview

VC-Backed Exits

VC-Backed Exits

VC-Backed Exits

VC-Backed Exits

VC-Backed Exits by Type

IPOs

  • The US IPO market saw 0 tech debuts in 1Q 2016, and just 18 during the entire year
  • Market uncertainty and easy access to private capital during recent years resulted in slowest year for IPO activity since 2010
  • Eight US offerings raised at least $100 million, the largest coming in at $238 million (Nutanix)—Amsterdam’s Takeaway.com held the largest IPO of the year at $368 million
  • Four offerings resulted in market caps of at least $1 billion at the time of listing (Nutanix, NantHealth, Twilio and Takeaway.com)

VC-Backed Exits

Acquisitions and Buyouts

  • With record amounts of cash on balance sheets, strategics were able to pay lofty premiums for private targets
  • Even as acquisition activity dropped to the lowest level since 2011, the exit value of such deals came in as the second-highest in the past decade
  • The median buyout size dropped by more than $20 million as PE firms picked up cheap platform add-ons

VC-Backed Exits

VC-Backed Exits

VC-Backed Exits

VC-Backed Exits

VC-Backed Exits by Region

VC-Backed Exits

VC-Backed Exits

Article by PitchBook