Corporations with deep pockets and lagging technology portfolios are likely to go bottom fishing as well. Technologies that took many millions to develop may well land on the auction block for pennies on the dollar. That could be the low point on returns as the market shifts from one form of private equity to another. During the first three quarters of last year, there were 89 funds focused on buyouts or mezzanine round investments. The statistics are derived from a quarterly tracking by Venture Economics of the performance of about 1,200 U.S. funds and more than 425 European funds.
Returns are net to investors after fees and interest.
Buyout funds are ready to listen. In California's Silicon Valley, start-ups and their backers are looking for strategic partners and buyers as exit strategies shift with the prevailing winds. In fact, those companies that spurned strategic partnerships and investments in happier days may be scrambling to find someone to buy them out now, according to San Francisco-based entrepreneur Stone Melet. In addition, some large, established companies are choosing to bring technology in-house rather than continuing to support its development in outside entities. Another former Spinway client, Barnes and Noble, could not be reached for comment about the effect this decision had on the support of its Website.