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Local Tech Wire

RESEARCH TRIANGLE PARK, N.C. – Exit routes opened for venture capital-backed firms in the first quarter, with merger-and-acquisition deals setting a record.

While M&A action flourished, the initial public offering exit route reopened as well to a level not seen since 2007.

According to Thomson Reuters and the National Venture Capital Association, 111 M&A deals were executed in the first quarter. For the 31 in which data was disclosed, the average deal was $180.2 million, a 21 percent jump over 2009. The number of M&A deals was the largest in records dating back to 1975. ()

Meanwhile, nine venture-backed firms went public.

Dow Jones VentureSource reported different totals. ()

It noted that eight venture-backed firms went public, matching the entire IPO total for 2009.

On the M&A side of the private equity ledger, VentureSource counted 77 deals worth $4 billion, which was nearly identical to 77 deals worth $3.4 billion that it counted in the first quarter a year earlier.

Despite the differences, the numbers indicate movement for VC-backed firms and investors. With the stock markets trading significantly higher, other firms are also waiting to go public.

"The exit activity in first quarter of 2010 has engendered a cautious optimism within the venture capital industry,” said Mark Heesen, president of the NVCA, in a statement.

“The IPO volume, while not nearly enough to declare a recovery, has shown the most improvement since the financial crisis began and the pipeline of companies in registration continues to build,” he added.

NVCA and Thomson report that 43 firms are registered with the SEC for an IPO. VentureSource reported 44 firms registered for an IPO.

“After two difficult, nearly dormant years for IPOs, venture-backed companies started 2010 with a strong showing in the public market,” added Jessica Canning, the global research director for Dow Jones VentureSource. “With investors looking to take advantage of the open IPO window and 44 U.S. venture-backed companies in IPO registration, 2010 will be an active year as long as the public markets continue showing interest in venture-backed offerings.”

One Triangle-area firmed, SciQuest, filed for an IPO in March.

“The record breaking number of venture-backed acquisitions is also encouraging as the quality of these transactions appears to have held strong. It is premature to suggest we have permanently turned the corner, but that corner is in sight and within reach as long as we can continue this positive upwards trajectory over the next consecutive quarters.”

In the first quarter a year ago, no VC-backed firms went public. The latest nine deals generated $936.2 million.

Of the IPOs, three were in biotech and four were IT-related.

On the M&A front, 81 of the deals were in the IT sector.