Turns out Facebook's fizzled IPO was a pretty good microcosm for 2012 in startup land: it was all one big fizzle. The final numbers for last year in venture-capital IPOs and acquisitions are in, and while there was no dot-com-era type of explosion, the much hyped new tech bubble appears to have just... petered out. There remains hope, as always, for the unpredictable year ahead. Here are some key stats from the Thompson Reuters and National Venture Capital Association survey released Wednesday:
- Venture-backed companies made less money for their investors than they did a year ago.
- There is less investment money out there, overall, with investors doling out $6.9 billion last quarter, compared to $10.1 billion the year before and $8.4 billion a quarter before that — a trend that The Wall Street Journal noted back in September, which we speculated may have had something to do with Facebook's IPO fail.
- Acquisitions of "venture-backed companies" were also down, totaling $3.52 billion last quarter down from $4.99 the year before, as were acquisitions in general, which totaled $21.5 billion, down 11 percent from $24.09 billion in 2011.
- The number of companies that opted to IPO fell to eight from 11 the year before.
The most positive figure from the entire report is actually skewed: Those eight companies that did IPO companies raised more money on average, combing out with higher valuations — an average that is weighed down almost entirely by Facebook. But venture-backed companies did raise $21.5 billion (way up from $10.7 billion the year before), which was the strongest annual funding since 2000.
These numbers match the trends we saw all year, with Facebook's initial stock drop scaring away investors from start-ups, venture capitalists having a hard time raising money for tech ventures, and companies like Kayak pushing off their IPOs as long as possible until market conditions suit edtheir needs. It's just a lot of hesitancy. Part of that might just be a Facebook effect, or maybe 2012 was the "peak of the hype cycle" as Scott Sandell, a venture capitalist at New Enterprise Associates, described the year to The Wall Street Journal's Pui Wing-Tam.
And a descent generally follows a peak, right? Still, Sandell doesn't see 2013 as a year of doom or gloom for Silicon Valley. Things are sunny! "The end isn't anywhere near," he said, pointing to bright spots in companies that sell technologies to businesses. Of course, those aren't the big tech 2.0 companies we hear about all the time, the ones that made up the much discussed and much more specific social media bubble. What will become of the Twitters and Tumblrs, the Pinterests and Paths and SnapChats and all the clones they've already spawned? The path is less clear than ever, but, hey, it's only the first week fo January. And it probably won't be as bad as this.