While more venture-backed businesses are going public  this year, a slowdown in mergers and acquisitions is creating a backlog of mature companies waiting for deals, new research shows.

Twenty-six venture-backed businesses  went public over the second quarter, eight more than over the first quarter, according to the National Venture Capital Association. Together, the deals raised a total of $4.27 billion, a 112 percent increase from the same period last year, the report said.

Businesses in the technology sector  accounted for half of all second-quarter deals, raising more than $2.5 billion alone. Nearly half stems from a $1.15 billion listing by MetroPCS Communications in April, the third largest venture-backed IPO on record. Led by Bear Stearns, Bank of America, Merrill Lynch, and Morgan Stanley, the Dallas-based wireless company listed 50 million shares at $23 per share.

TomoTherapy, a Madison, Wis.-based radiation therapy firm that listed 11.7 million shares at $19 each in May, led IPOs in the life-sciences industry, which together accounted for 42 percent of all venture-backed deals.

"The high dollar volume of technology venture-backed offerings is encouraging for other technology companies in the pipeline," Alex Tan, a private equity researcher at Thomson Financial, which co-produced the report, said in a statement. "If year-to-date volume is any indication of the rest of the year, 2007 should be a noteworthy year for venture-backed IPOs in the sector."   

Still, offsetting the gains in IPO activity  was a corresponding decline in mergers and acquisitions -- ordinarily the most popular exit strategy for venture investments, the report said.

Over the second quarter, the number of venture-backed M&As dropped to 67, down from 77 in the previous quarter and 95 in the second quarter of 2006.

"The recent improvements in the IPO market cannot totally offset the low M&A volume this quarter," Mark Heesen, president of the National Venture Capital Association, said in a statement. He said the decline may point to "digestion issues" among larger acquirers and a few big deals that have yet to close. 

"Once some larger deals move through, we hope to see the volume rebound in the second half of the year," Heesen said.

As with IPOs, venture-backed technology firms led M&A activity in the second quarter, accounting for 52 deals with a total disclosed value of some $1.7 billion, the report said. Within technology, 39 software and Internet firms were acquired, compared to just eight life sciences firms, the report said.