Venture capital-backed deals and IPOs mark solid start to 2011

LOS ANGELES (Reuters) – Venture capital-backed acquisitions and IPOs climbed to $7.3 billion in 2011’s first three months, marking the strongest start to the year for the beleaguered industry since 2007.

Fourteen IPOs came to the market to raise $1.4 billion and venture-backed deals worth $5.9 billion were carried out in the first three months, according to data compiled by Thomson Reuters and the National Venture Capital Association.

Venture capital investment and activity has bounced back in recent quarters after the drought of 2008 and 2009. Of the first quarter’s deals with a disclosed value, the majority targeted computer services and the Internet and nearly half delivered returns of more than four times the venture investment.

The association estimates that a 20 to 30 percent increase in the number of venture-backed companies going public in 2011 was a “reasonable” target. Analysts say the long-moribund U.S. IPO market is poised for a bounceback this year, and many investors are hoping to see mega IPOs — such as Facebook or LinkedIn — hit the market even as some warn of outsized valuation expectations.

“The venture capital exit market today is exhibiting a welcome stability in terms of both IPOs and acquisitions,” said Mark Heesen, the association’s president. “A successful 2011 will be contingent upon maintaining the momentum in the acquisitions market while moving the current IPO pipeline through at a faster clip.”

Qihoo racked up the best first-day performance in the quarter. Shares of Qihoo 360 Technology Co Ltd (QIHU.N: Quote, Profile, Research), China’s third most-popular Internet company, more than doubled in their March 30 debut on the New York Stock Exchange in an echo of the Chinese technology IPO euphoria of late 2010.

The largest deal in the first three months was Medtronic Inc’s (MDT.N: Quote, Profile, Research) acquisition of Mountain View, California-based Ardian Inc for $800 million.

(Reporting by Edwin Chan; Editing by Tim Dobbyn)

Venture capital-backed deals and IPOs mark solid start to 2011