The exit route through initial public offerings is opening up for venture-backed firms in 2007. At the same time, though, exits through mergers and acquisitions are fewer, according to a new report.

Seventeen venture-backed firms pulled out IPOs worth $2.09 billion in the first three months of the year, according to Thomson Financial and the National Venture Capital Association.

That’s a huge increase from the opening quarter of 2006, when only 10 firms managed IPOs.

The IPO rush continued Monday, when Merrion Pharmaceuticals, which is based in Wilmington, N.C., and Dublin, Ireland, disclosed plans to go public with a $46 million IPO.

As of Monday, the NVCA and Thomson Financial reported that 44 firms are registered for IPOs, a jump from 24 at the end of the first quarter a year ago.

“The mostly positive aftermarket performance of venture-backed offerings and the strong IPO pipeline over the past 12 months indicates the quality of the companies going through the exit process,” said Alex Tan, the Global Private Equity Research Manager at Thomson Financial.

However, as IPO activity increased, the number of mergers and acquisitions of venture-backed firms dipped in the first quarter. While average deal size increased to $161.2 million, the number of transactions fell to 62 from 104 in the same time period for 2006.

The $161.2 million average for M&A deals was the second-highest quarterly performance since 2004, topped only by the $165.3 million average in the fourth quarter of last year.

Mark Heesen, president of the NVCA, said the quarterly statistics could mean a year of change for venture firms seeking exits.

“This quarter may mark a subtle shift in the exit mix for venture capital,” Heesen said.

“There appears to be a crack in the IPO window, which changes the psychology of the market,” he added. “In recent quarters, an IPO has not been a viable option for most of these companies. However, the increase in venture-backed IPO registrations is an encouraging sign. At the same time, large corporations have slowed their acquisition pace, likely because of stock-market uncertainty and earnings pressure. This all means fewer, but higher quality, acquisitions as evidenced by the numbers."

The number of IPOs in the first quarter was the highest in the opening three months since 2004.

Of the IPOs, nine were in information technology, topped by the $600 million raised by wireless broadband service provider Clearwire.

Seven other IPOs were in life sciences.