Dow Jones VentureSource: M&As Offer Little Recourse as Industry Suffers Record 8-Month IPO Drought; Medtronic Buys Account for 30% of All Liquidity SAN FRANCISCO, April 1 /PRNewswire/ -- Having not seen a venture-backed company complete an initial public offering (IPO) in nearly eight months, the U.S. venture capital industry is suffering through its worst liquidity drought on record, according to new statistics published by Dow Jones VentureSource (follow the story at http://www.twitter.com/djventurewire). During the first quarter of 2009, venture capitalists managed to generate just $3.2 billion in liquidity through mergers or acquisitions (M&As) of 68 portfolio companies, a 65% drop from the $9.1 billion in liquidity generated in the first quarter of 2008 and the lowest quarterly total since 2003. "The most disturbing part about these new liquidity figures is that we've already reached the lows seen after the dot-com bust and we may not be at the bottom yet," said Jessica Canning, Global Research Director for VentureSource. "The IPO market is totally closed and there's just no clear indication right now that it will revive any time in the next quarter or two, even with 43 companies currently in registration. It's a tough time to be a venture capitalist - and likely even tougher to be an investor in a venture fund." M&As: Only Up From Here? According to VentureSource, liquidity generated through the sale (M&As) of venture-backed companies fell 64% from $8.8 billion in the first quarter of 2008 to $3.2 billion in the first quarter of this year. The 68 M&As in the quarter are a far cry from the 104 completed in the first quarter last year and the lowest number of M&A transactions in a quarter since 1999. "Emerging companies in the information technology (IT) space are really suffering. In the first quarter of 2009, only 43 of these companies were sold - the fewest we've seen in 10 years," said Ms. Canning. "This is due to the fact that many public technology companies are focused on conserving capital and the few that are buying venture-backed companies are doing so for lower prices." The data showed that the overall median amount paid for a VC-backed company in the first quarter of the year was just shy of $22.1 million--a 63% drop from the nearly $60 million median paid during the same period in 2008. The largest M&A transaction in the first quarter was Medtronic's $700 million acquisition of Irvine, Calif.-based medical device-maker CoreValve. In fact, Medtronic was responsible for providing 30% of all venture liquidity in the quarter, as it also bought Ablation Frontiers, a Carlsbad, Calif.-based medical device company, for $225 million. Companies Need Less Money, Time to Reach Liquidity According to VentureSource, venture-backed companies took less time and money to achieve liquidity in the first quarter of 2009. Prior to achieving a merger or acquisition, the companies raised a median of $15.5 million in venture capital - 33% less than the median $23 million raised by companies that exited during the same period last year. In addition, the median amount of time it took to reach liquidity was 4.7 years in the first quarter of 2009, nearly a third less time than the 6.8-year median seen in the first quarter of 2008. For more information, journalists can contact Adam Wade at 415-439-6666 or , or follow the story at http://www.twitter.com/djventurewire. For general information about VentureSource, visit http://venturecapital.dowjones.com/. The investment figures included in this release are based on aggregate findings of Dow Jones VentureSource's proprietary U.S. research. This data was collected by surveying professional venture capital firms, through in-depth interviews with company CEOs and CFOs, and from secondary sources. These venture capital statistics are for equity investments into early-stage, innovative companies and do not include companies receiving funding solely from corporate, individual, and/or government investors. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice. Copyright (C) 2009, Dow Jones VentureSource About Dow Jones Dow Jones & Company (http://www.dowjones.com/) is a subsidiary of News Corporation (Nasdaq: NWS, NWS.A; ASX: NWS, NWSLV; http://www.newscorp.com/). Dow Jones is a leading provider of global business news and information services. Its Consumer Media Group publishes The Wall Street Journal, Barron's, MarketWatch and the Far Eastern Economic Review. Its Enterprise Media Group includes Dow Jones Newswires, Factiva, Dow Jones Client Solutions, Dow Jones Indexes and Dow Jones Financial Information Services. Its Local Media Group operates community-based information franchises. Dow Jones owns 50% of SmartMoney and 33% of Stoxx Ltd. and provides news content radio stations in the U.S. DATASOURCE: Dow Jones VentureSource CONTACT: Adam Wade of Dow Jones Financial Information Services, +1-415-439-6666, Web Site: http://www.twitter.com/djventurewire http://www.dowjones.com/ http://venturecapital.dowjones.com/ Company News On-Call: http://www.prnewswire.com/comp/683449.html

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