Venture Capital Fundraising Activity Contracts in the Second Quarter of 2009
July 13 2009 - 7:00AM
PR Newswire (US)
NEW YORK, July 13 /PRNewswire-FirstCall/ -- Just 25 venture capital
funds raised $1.7 billion in the second quarter of 2009, according
to Thomson Reuters and the National Venture Capital Association
(NVCA). This level represents the smallest number of venture funds
raising money in a single quarter since the third quarter of 1996
(21 funds) and the lowest level of dollars committed since the
first quarter of 2003 when $938.1 million was raised. Fundraising
by Venture Funds Year/Quarter Number of Venture Funds Capital ($M)
2004 211 19,156.0 2005 239 28,767.4 2006 241 31,925.0 2007 251
36,064.9 2008 221 28,395.9 2009 70 6,312.8 2Q'07 86 8,661.1 3Q'07
77 8,595.8 4Q'07 86 12,322.5 1Q'08 72 7,123.4 2Q'08 82 9,284.5
3Q'08 62 8,393.3 4Q'08 49 3,594.7 1Q'09 49 4,610.9 2Q'09 25 1,701.9
Source: Thomson Reuters & National Venture Capital Association
"The slower venture fundraising activity is no surprise given the
current environment," said Mark Heesen, president of the NVCA. "The
final manifestations of the bubble burst combined with a troubled
exit market make it a very difficult time to raise money. We
believe that many venture firms are waiting until 2010 and beyond
to go out to their limited partners who, in an improved market,
will look more favorably upon the asset class vis-a-vis other
alternatives. That said, there will be firms that will not be able
to raise a follow-on fund and our industry is positioned to
contract over the next five years through this type of attrition."
While the number of funds raised fell to a 13 year low, the
relative number of new funds versus follow-on funds reached a four
quarter high. There were eight new funds and 17 follow-on funds
raised in the second quarter of 2009, a ratio of about 2-to-1 of
follow-on to new funds. By comparison, just three new funds and 46
follow-on funds were raised in the first quarter, a ratio of over
15-to-1 of follow-on to new funds. 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 No. of New
Follow-on Total 2004 55 156 211 2005 64 175 239 2006 56 185 241
2007 62 189 251 2008 48 173 221 2009 11 59 70 2Q'07 17 69 86 3Q'07
15 62 77 4Q'07 27 59 86 1Q'08 10 62 72 2Q'08 23 59 82 3Q'08 13 49
62 4Q'08 12 37 49 1Q'09 3 46 49 2Q'09 8 17 25 Source: Thomson
Reuters & National Venture Capital Association The largest fund
raised in the second quarter was follow-on fund Domain Partners
VIII, L.P. (early stage, $371.1 million) by firm Domain Associated
Management. About Thomson Reuters Thomson Reuters is the world's
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(NASDAQ:TRIN). For more information, go to
http://www.thomsonreuters.com/. About National Venture Capital
Association The National Venture Capital Association (NVCA)
represents approximately 450 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 2006. 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 http://www.nvca.org/. DATASOURCE:
Thomson Reuters CONTACT: Emily Mendell of NVCA, +1-610-565-3904, ;
or Janice Addams of Thomson Reuters, Public Relations,
+1-646-223-6940, ; or Sandy Anglin, Thomson Reuters, Research
Analyst, +1-646-223-6997, Web Site: http://www.thomsonreuters.com/
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