Venture capital exits generally come in the form of initial public offerings or merger/acquisition transactions of portfolio companies. According to Ernst & Young’s annual report on the state of the venture capital industry (Transition: Global Venture Capital Insights Report 2006), the US and Israel have seen increasing M&A activity in recent years, while Europe has experienced an increase in
IPOs. This trend has not, however, been seen to apply to biotechnology companies of late. Although IPOs have historically funded late stage trials and product launches, there appears to have been a recent decline in the number of VC-backed biotechs achieving an IPO exit both in the US and Europe. (Interestingly, Israeli biotech firms have been an exception to this trend with a spate of offerings taking place on the Tel Aviv Stock Exchange ‘TASE’ in the past two years (See Life science firms trek to the TASE, IVCJ, March, 2007).
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