Tuesday, April 13, 2010

Ouch: Venture capital fundraising hits 17-year low in U.S.

"U.S. venture capital firms' first-quarter fundraising was the lowest first quarter since 1993, according to Thomson Reuters and the National Venture Capital Association.

Thirty-two funds raised $3.6 billion in the quarter ended March 31, down from $4.1 billion in 44 funds in the previous quarter and $5.3 billion in 57 funds in the first quarter of 2009.

In the first quarter of 1993, 10 venture capital funds raised $219.3 million.

The largest new fund raised from a new firm in the most recent quarter was the $50.7 million Longwood Founders Fund.

The largest funds raised overall were $750 million each for Battery Ventures IX and Oak Investment Partners XIII."

From NVCA:
""There is no question that the bar has been raised for venture capital fundraising,” said Mark Heesen, president of the NVCA. “Over the last two years, alternative asset allocations have declined and the exit market has suffered, putting venture firms in the unenviable position of communicating their value in an extremely challenging environment.

Many firms have been waiting until the exit market improves before embarking upon their fundraising efforts. This wait has been considerably longer than many firms anticipated. Those firms that are successfully raising money today do have both a track record as well as vision for the future. As predicted, the next few years will see the industry consolidate with the strongest firms surviving.”

There were five new funds and 27 follow-on funds raised in the first quarter of 2010, a ratio of over 5-to-1 of follow-on to new funds. The largest new fund reporting commitments during the first quarter of 2010 was Boston-based Longwood Founders Fund, which raised $50.7 million in its inaugural fund. A “new” fund is defined as the first fund at a newly
established firm, although the general partner of that firm may have previous experience investing in venture capital. "

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