The Chinese IPO ripple effect

Chinese initial public offerings have been on ice for months now. More than a quarter of the year is up and not a single Chinese IPO has debuted.

That's had a negative effect on venture capital fundraising, a critical tool for startups trying to commercialize their innovation or idea. For the first time since the second quarter of 2009, no venture-backed companies completed an IPO, reported Dow Jones publication VentureWire. That added challenges to private equity firms already struggling to unload investments, support funding rounds and deliver returns for investors.

According to data from VentureSource, another Dow Jones entity, the amount of new capital raised by VC firms in the first three months of this year dropped to $442 million, compared with $1.27 billion in the same quarter a year earlier.

Here's a look at the numbers:

• 38 Chinese firms went public in 2010 in the U.S. The following year, that number fell to 15. Last year, just two completed IPOs, reported the San Jose Mercury News.

Meanwhile in Europe and the U.S., the VC numbers also lagged. European venture capital exits hit their lowest level on record in the first quarter due partly to the lack of opportunities via IPOs. There was just one IPO (Asestek AS) completed in Europe in the first quarter, according to VentureSource data.

Photo: Shenzhen Stock Exchange via Wikimedia

This post was originally published on Smartplanet.com