1. Emily Mendell, NVCA, 610-565-3904, emendell@nvca.org
Joshua Radler, Thomson Venture Economics, 646-822-7323, Joshua.radler@thomson.com
VENTURE-BACKED IPO ACTIVITY WEAK IN Q4 AND FULL YEAR;
ACQUISITIONS MARKET CARRIED 2005 EXITS FOR VENTURE-BACKED COMPANIES
New York, NY- January 3, 2006 – Seventeen venture-backed companies raised $1.6 billion through initial
public offerings (IPOs) and 78 venture-backed acquisitions were reported in the fourth quarter of 2005,
according to the Exit Poll report by Thomson Venture Economics and the National Venture Capital
Association (NVCA). The fourth quarter exit activity mirrored the full year 2005 which was characterized
by a significantly weak IPO market propped up by a stronger acquisitions market. For the full year 2005,
fifty-six venture-backed IPOs raised a total of $4.5 billion representing a 40% decline in volume from 2004
while the acquisitions market saw 330 transactions with a disclosed value of $14.4 billion, similar to the
previous year.
Venture-Backed Liquidity Events by Year/Quarter, 2000-2005
Total Total Average
M&A Deals **Average
M&A IPO IPO
with Disclosed M&A Deal Offer Offer
Total M&A Disclosed Value Size ***Number Amount Amount
Quarter/Year Values ($M) ($M) ($M) ($M)
Deals of IPOs
2000 317 203 68,492.1 338.4 264 25,499.4 96.6
2001 353 165 16,798.9 101.8 41 3,489.9 85.1
2002 316 151 7,874.4 52.1 24 2,473.5 103.1
2003-1 69 21 1,453.3 69.2 1 77.2 77.2
2003-2 75 27 1,841.9 68.2 2 164.0 82.0
2003-3 78 41 2,127.7 51.9 9 732.8 81.4
2003-4 71 34 2,303.2 67.7 17 1,048.7 61.7
2003 293 123 7,726.1 62.8 29 2,022.7 69.7
2004-1 80 45 3,921.0 87.1 13 2,721.1 209.3
2004-2 89 48 4,514.6 94.1 29 2,077.8 71.6
2004-3 86 46 4,140.1 90.0 24 3,225.6 134.4
2004-4 84 46 2,862.2 62.2 27 2,990.4 110.8
2004 339 185 15,437.9 83.4 93 11,014.9 118.4
2005-1 80 45 4,209.9 93.6 10 720.7 72.1
2005-2 76 32 3,691.0 115.3 10 714.1 71.5
2005-3 96 46 4,094.8 89.0 19 1,458.1 76.7
2005-4* 78 34 2368.8 69.7 17 1,568.1 92.2
2005 330 157 14,364.4 91.5 56 4,461.0 79.7
Thomson Venture Economics & National Venture Capital Association
Data comprises transactions reported as closing as of 12/30/05
*Q4 2005 M&A data is preliminary and subject to change
**Only accounts for deals with disclosed values
***Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges,
regardless of domicile

2. According to Mark Heesen, president of the NVCA, the venture capital exit market was characterized in
2005 by a lackluster IPO market, which can be attributed to a number of factors.
“For the IPO market to improve, we need relief from certain hurdles associated with the Sarbanes Oxley
Act, but we also need an investing public that is bullish on technology,” said Heesen. “Investors have every
reason to have confidence in the venture-backed companies in registration today. Most have survived the
boom and the bust, which speaks to the soundness of their business models and the strength of their
discipline. They have weathered significant difficulties and understand excess and how to avoid it. Once
the market begins to accept these organizations and that is reflected in their share prices, emerging
companies will consider the IPO path once again.”
IPO Activity Highlights
The fourth quarter of 2005 was dominated by the Technology sector, which saw ten venture-backed IPOs
raise $1.1 billion. The Technology sector also contained the largest IPO of the fourth quarter and the year,
with IntercontinentalExchange, Inc.’s $415.9 million offering. IntercontinentalExchange was backed by
TA Associates and Goldman, Sachs & Co. The second largest IPO of the quarter, DealerTrack, Inc., was
also from the Technology sector. DealerTrack raised $170.0 million and was backed by J.P. Morgan
Partners and GRP Partners. The Life Sciences sector had five venture-backed IPOs raise a total of $191.2
million in the fourth quarter. The largest Life Sciences IPOs in the quarter were NxStage Medical, Inc. and
Somaxon Pharmaceuticals, Inc., which both raised $55.0 million.
In 2005, the Technology sector saw 26 venture-backed companies raise a total of $2.6 billion, with the
Internet Specific category leading the sector with ten IPOs raising $1.3 billion. The Life Sciences sector
saw 23 companies raise a total of $1.2 billion, while Non-high Technology had seven IPOs raise $727.6
million. The two largest IPOs of 2005, IntercontinentalExchange, Inc. and OptionsXpress, Inc., were from
the Technology sector. The third largest venture-backed IPO of the year, Focus Media, came from the
Non-high Technology sector. As of December 30th, 33 of the 56 companies, or 59%, were trading at or
above their offering price.
IPO Industry Breakdown
Q4 2005 Full-Year 2005
*Number Total *Number
of Venture of Total
Venture Backed Venture Venture
Backed Offering Backed Backed
IPO's in Size IPO's in Offering
Industry the U.S. ($M) the U.S. Size ($M)
Internet Specific 4 602.1 10 1,259.3
Semiconductors 3 240.5 7 570.1
Communications/Media 2 103.5 4 315.8
Computer Software 1 170.0 3 356.5
Computer Hardware -- -- 2 55.2
Technology TOTAL 10 1,116.1 26 2,556.9
Medical/Health 4 136.2 13 670.0
Biotechnology 1 55.0 10 506.4
Life
Sciences TOTAL 5 191.2 23 1,176.4
Non-high Technology 2 260.8 7 727.6
Other TOTAL 2 260.8 7 727.6
Thomson Venture Economics & National Venture Capital Association
*Includes all companies with at least one U.S. VC investor that trade on U.S. exchanges,
regardless of domicile

3. There are currently only 16 companies ‘in registration’ with the Securities and Exchange Commission,
meaning they have filed during 2005 and are currently preparing for their initial public offerings. This
compares with 57 venture-backed companies that were in registration at the end of 2004.
Merger and Acquisition Highlights
Venture-backed M&A activity remained strong for the second consecutive year, carrying forward the
recovery from the post-bubble trough. Based on data collected as of December 30, 2005, the number of
transactions for the year held steady at 330 compared to 339 in 2004. The average disclosed deal value
rose in 2005 to $91.5 million from $83.4 million in 2004.
Daniel Benkert, senior analyst at Thomson Financial said, “We have entered a short-term period of stasis,
where the mass of those bubble-era companies are finally reaching a level of maturity worthy of a
profitable exit. Considering the uncertain state of the IPO option, the M&A market remains healthy and we
are probably seeing that market coming to a plateau, but a reasonably sustainable and very rational one.”
M&A Industry Breakdown
Q4 2005 Full-Year 2005
Total *Number Total
Venture of Venture
*Number *Number of Backed Venture *Number of Backed
Disclosed Backed Disclosed
of Venture Venture Backed Venture Backed
Backed M&A Deal M&A M&A Deal
M&A deals (disclosed)deals Value deals in (disclosed)deals Value
Industry ($M) the U.S. ($M)
in the U.S. in the U.S. in the U.S.
Internet Specific 20 9 452.0 76 36 3408.1
Semiconductors 6 4 173.7 14 6 281.2
Communications/Media 4 3 81.0 31 15 2316.8
Computer Software 24 7 675.7 109 50 3462.7
Computer Hardware 5 3 69.9 13 6 233.9
Technology TOTAL 59 26 1,452.2 243 113 9,702.6
Medical/Health 11 5 682.5 46 25 3277.0
Biotechnology 4 1 113.5 12 4 699.5
Life
Sciences TOTAL 15 6 796.0 58 29 3,976.5
Non-high Technology 4 2 120.4 29 15 685.2
Other TOTAL* 78 34 2,368.8 330 157 14,364.4
*Q 4 2005 M&A numbers are preliminary and are subject to change
The Software sector saw the most transactions in the fourth quarter at 24 followed closely by the Internet –
Specific sector at 20. These sectors also hold the number one and two positions for the full year 2005 at
109 and 76 deals respectively. Life Sciences, which includes biotechnology and medical devices, saw 15
deals in the fourth quarter and 58 deals for the full year.

4. Analysis of M& A Transaction Values versus Amount Invested
Relationship between transaction
2004 2005
value and investment
Deals where transaction value is less
than total venture investment 62 48
Deals where transaction value is 1-4x
total venture investment 61 58
Deals where transaction value is 4x-
10x total venture investment 39 30
Deals where transaction value is
21 18
greater than 10x venture investment
Total Disclosed Deals 183 154
Source: Thomson Venture Economics & National Venture Capital Association
* In 2004, 185 deals had disclosed values, but two of these targets did not have a
disclosed total investment amount.
** In 2005, 157 deals had disclosed values, but three of these targets did not have a disclosed total
investment amount.
An analysis of the returns these acquisitions generated in transaction values shows a market with a strong
degree of symmetry with regard to the level of success that can be expected using the M&A liquidity
option. Both 2004 and 2005 follow the same pattern, with roughly 1/3 of deals returning at least 4x or
greater the investment, 1/3 returning 1x – 4x the investment, and 1/3 bringing in less than the amount
invested.
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The National Venture Capital Association (NVCA) represents approximately 460 venture capital and
private equity firms. NVCA's mission is to foster greater understanding of the importance of venture capital
to the U.S. economy, and support entrepreneurial activity and innovation. According to a 2004 Global
Insight study, venture-backed companies accounted for 10.1 million jobs and $1.8 trillion in revenue in the
United States in 2003. The NVCA represents the public policy interests of the venture capital community,
strives to maintain high professional standards, provides reliable industry data, sponsors professional
development, and facilitates interaction among its members. For more information about the NVCA, please
visit www.nvca.org.