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Mirroring the national trend, initial public offerings by Maryland companies declined last year to just one from three in 2007, according to data from business information company Hoover's.
Nationally, the number of IPOs dropped to 30 in 2008 from 204 the previous year, Hoover's reported.
The decline was attributed by Mark Heesen, president of the National Venture Capital Association, to the financial and credit crisis. The Arlington, Va., organization released a report this week with Thomson Reuters that outlined the decrease in venture-backed IPOs, as did Dow Jones VentureSource recently.
Seven — the fewest since at least 1992 — of the 30 IPOs last year were by companies backed by venture capital.
"The inability of our strongest companies to go public and the softening of acquisitions activity continue to have a major ripple effect that now reaches every stage of the venture investment life cycle," Heesen said. "As a result, new investments and fundraising will slow considerably in 2009 until the exit markets reopen and the pipeline is cleared."
The lone Maryland company that completed an IPO last year — Bethesda mortgage real estate investment trust American Capital Agency Corp. — was not backed by venture capital. American Capital's stock has performed better than most of the companies that went public last year, as the price was actually higher on Thursday at $21.18 than the $19.50 it opened at on its first trading day in May.
Much of the stock's performance can be attributed to the healthy dividends and asset class it is invested in, said Jennifer A. Burke, a company spokeswoman. American Capital declared a dividend of $1.20 per share for the 2008 fourth quarter and $1 per share for the third quarter, more than many businesses. The company, which invests in securities and mortgage obligations guaranteed by the federal government, is managed and advised by an affiliate of Bethesda investment manager American Capital.
"We're also aided by the current government's policy of reducing funding rates to historic lows, which helps the [real estate investment trust] model," Burke said.
The three Maryland companies that went public in 2007 — Bethesda biotechnology company Sucampo Pharmaceuticals, Columbia information technology and security business Sourcefire and Annapolis health care software holding company CBay Systems Holdings — all had lower stock prices Thursday than when they started trading. Sourcefire and CBay were backed by venture capital.
Deals for venture-backed
firms getting larger
About the same number of Maryland venture-backed companies were acquired or merged last year as in 2007 — seven versus eight, according to VentureSource.
Last year's deals were larger than 2007's. San Jose, Calif., auction giant eBay's purchase of Timonium online bill-paying company Bill Me Later for about $945 million was the third-largest nationally, according to VentureSource.
That was about $450 million less than the biggest deal of the year for a venture-backed firm, Dell's purchase of Nashua, N.H., data storage company Equalogic.
Bill Me Later was among Inc. magazine's 65 fastest-growing companies nationally the past two years, with 2007 revenue reaching $86 million, up from $3.2 million in 2004.
Another large acquisition last year involved Rockville biotechnology company CoGenesys, which was bought by Israeli business Teva Pharmaceutical Industries for some $400 million. That was the sixth-largest purchase nationally, according to VentureSource.
Last year, acquisitions or mergers involving venture-backed companies nationally declined by 29 percent from 2007, to 325, according to the Dow Jones firm. That was the fewest since 1999.