Quarter Shows Decline in Number of Funds and Dollars Raised
NEW YORK, NY--(Marketwire - April 12, 2010) - US venture capital firms raised $3.6 billion in the first quarter of 2010 from 32 funds, according to Thomson Reuters and the National Venture Capital Association (NVCA). This level marks a 31% decline, by dollar commitments, compared to the first quarter of 2009 and 44% decline by number of funds. It also represents the slowest opening quarter since 1993.
Fundraising by Venture Funds
Year/Quarter Number of
Funds Venture
Capital
($M)
2005 243 29,042.7
2006 243 32,094.9
2007 253 36,206.4
2008 225 28,530.7
2009 140 15,820.7
2010 32 3,617.8
1Q'08 75 7,184.8
2Q'08 83 9,294.6
3Q'08 63 8,497.4
4Q'08 49 3,553.9
1Q'09 57 5,250.9
2Q'09 32 4,203.7
3Q'09 29 2,296.8
4Q'09 44 4,069.3
1Q'10 32 3,617.8
Source: Thomson Reuters and National Venture Capital Association
"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 five-to-one 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.
VC Funds: New vs. Follow-On
No. of
New No. of
Follow-
on Total
2005 67 176 243
2006 56 187 243
2007 62 191 253
2008 50 175 225
2009 28 112 140
2010 5 27 32
1Q'08 12 63 75
2Q'08 23 60 83
3Q'08 14 49 63
4Q'08 11 38 49
1Q'09 5 52 57
2Q'09 11 21 32
3Q'09 9 20 29
4Q'09 8 36 44
1Q'10 5 27 32
Source: Thomson Reuters and National Venture Capital Association
The largest funds raised during the first quarter of 2010 were Battery Ventures IX, L.P. and Oak Investment Partners XIII, L.P which both saw $750 million in fund commitments during the quarter.
About Thomson Reuters
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About National Venture Capital Association
The National Venture Capital Association (NVCA) represents more than 400 venture capital firms in the United States. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy and support entrepreneurial activity and innovation. According to a 2009 Global Insight study, venture-backed companies accounted for 12.1 million jobs and $2.9 trillion in revenue in the United States in 2008. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org.