The number of initial public offerings for US companies that had been backed by venture capital fell back during 2005, and shows little sign of returning to its 1990s levels.

Low investor interest, together with regulatory changes on Wall Street that have made it more complicated and expensive for companies to obtain a public listing, have made it more likely that venture capitalists will get their money back by selling young companies directly to large corporations, analysts say.

The number of public offerings fell from 67 in 2004 to just 41 last year, according to data compiled by research firm VentureOne, a San Francisco-based unit of Dow Jones. This is sharply down, not just on the days of the dot.com boom, but also on the regular level of such offerings in the years before then (see graph).

VentureOne research analyst Josh Grove points out that corporations have no shortage of cash available to make such acquisitions. Last year, they forked out more than $27 billion to make them happen, up almost one-fifth on 2004. “They're snapping up these companies before they can go public,” he says.

Thirteen of last year's offerings were biotechnology firms and 11 specialized in information technology. In biotechnology, investors have become particularly wary of buying into companies until they are running late-stage clinical trials. “The demand is not there,” says Michael Lytton, a general partner of Oxford Bioscience Partners, a life-sciences venture capital company based in Boston.