Investors Suffered in the "Year of Startups: 2012"

Bangalore: The year 2012 is being referred to as the year of Startups considering the huge number companies incepted but it did not bring much for the investors who backed them. The VCs made less money in the last quarter compared with last year.

Acquisitions totaled $3.52 billion in the fourth quarter, down 29 percent from $4.99 billion a year earlier, according to data from Thomson Reuters and the National Venture Capital Association. For the whole year, acquisitions totaled $21.5 billion which is down 11 percent from $24.09 billion in 2011.

Looking towards the IPOs, it totaled $1.41 billion in the fourth quarter, down 50 percent from $2.8 billion a year earlier. For the full year, venture-backed IPOs totaled $21.45 billion, doubling from $10.69 billion in 2011. But if the $16 billion that Facebook’s IPO raised in May is removed, the total actually is half of that last year.

Talking about numbers, just eight venture-backed companies went IPO last quarter, compared with 11 a year earlier and about 95 companies were acquired, compared with 122 a year earlier.

The venture industry has been criticized that the returns it offers do not justify the years it requires investors to tie up their cash. The industry is criticized for poor returns and business practices.