Venture backed companies raised $934.2 million in the third quarter, down from $2.01 billion in the second quarter and $1.46 billion in the third quarter of 2005, according to the National Venture Capital Association and Thomson Venture Economics' quarterly Exit Poll.

Eight venture backed companies went public in the third quarter. The $270 million IPO of Mindray Medical International, a Chinese medical equipment maker, was the largest. The company's shares opened at $16 on September 26 and closed last Tuesday at $16.13 a share.

Emily Mendell, the NVCA's v.p. of strategic affairs, pointed to the usual suspect for the tepid results: the cost of complying with the Sarbanes Oxley Act. But she found two bright spots. Of the eight companies that went public, seven were trading above their offering price. There are also 51 venture-backed companies in registration for IPOs with the Securities and Exchange Commission. "We continue to hear form venture capitalists that M&A is the cheaper, safer and better exit route," Mendell said.

The M&A exit route still didn't look as welcoming in the third quarter: 74 companies were acquired for $2.7 billion. In contrast, 47 were acquired for $4.37 billion in the same period last year. In the second quarter, 37 companies were acquired for 3.7 billion.