The weak IPO market is keeping U.S. venture capitalists on the sidelines, according to Thomson Financial/Venture Economics and the National Venture Capital Association.

Only four U.S. venture-backed companies came to market in the first quarter, raising US$376.3 million. This is down from a high of 81 venture-backed IPOs in the first quarter of 2000. Only 37 venture-backed IPOs were seen in all of 2001, compared to 226 in 2000.

“The sluggish IPO market continues to be troublesome to the venture capital community as it is one of two vehicles — the other being the M&A market — that enables venture capitalists to realize liquidity. Overall performance of venture funds will not improve significantly until entrepreneurial technology companies can once again raise capital in the public markets,” said Mark Heesen, president of the NVCA.

“While it looks like it’s breathing, there are no sure signs of life in the IPO market yet-at least not enough yet to provide venture capitalists with much needed liquidity,” said Jesse Reyes, vice president, Venture Economics. “But given the anticipated better economic climate of the next few months there are enough quality companies in the pipeline that when the market does open up, there should be some favorable exits for the venture industry.”