Thursday, October 14, 2010


Fewer Firms Raising Smaller Funds Remains the Trend

New York, October 11, 2010 - Forty-five US venture capital funds raised nearly $3
billion in the third quarter of 2010, according to Thomson Reuters and the National
Venture Capital Association (NVCA). This level marks a 40% increase, by dollar
commitments, compared to the second quarter of 2010, which saw 51 funds raise $2.1
billion during the period. Most of this increase was attributable to a single $750
million fund closing in the quarter.

Fundraising by Venture Funds
Year/Quarter Number Venture
of Funds Capital
2005 245 29,786.5
2006 243 32,125.7
2007 252 35,426.7
2008 229 28,500.0
2009 151 16,455.2
2010 124 9,103.2
3Q'08 62 8,449.9
4Q'08 55 3,620.4
1Q'09 59 5,373.9
2Q'09 40 4,718.0
3Q'09 32 2,310.3
4Q'09 46 4,053.1
1Q'10 43 3,968.8
2Q'10 51 2,142.8
3Q'10 45 2,991.6

Source: Thomson Reuters and National Venture Capital Association

"With funds sizes getting smaller and fewer firms raising money, we are experiencing a
period of time in which venture capital investment is consistently outpacing
fundraising, creating an industry that will be considerably smaller in the next decade"
said Mark Heesen, president of the NVCA. "While the inclination is to assume that a
contracting industry is problematic, most venture capitalists and their limited partners
believe that this environment will drive future returns upward without harming
innovation and job creation."

There were 31 follow-on funds and 14 new funds raised in the third quarter of 2010, a
ratio of 2.2-to-1 of follow-on to new funds. The largest new fund reporting commitments
during the third quarter of 2010 was New York-based Raine Partners I, L.P., which raised
$303.4 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 No. of Total
New Follow-
2005 54 191 245
2006 67 176 243
2007 77 175 252
2008 63 166 229
2009 42 109 151
2010 35 89 124
3Q'08 16 46 62
4Q'08 17 38 55
1Q'09 10 49 59
2Q'09 14 26 40
3Q'09 12 20 32
4Q'09 14 32 46
1Q'10 13 30 43
2Q'10 13 38 51
3Q'10 14 31 45

Source: Thomson Reuters and National Venture Capital Association

The largest funds raised during the third quarter of 2010 was Menlo Park,
California-based Institutional Venture Partners XIII, L.P. which raised $750 million
followed Boston, Massachusetts-based Third Rock Ventures II, L.P., which raised $426


The Thomson Reuters/National Venture Capital Association sample includes U.S.-based
venture capital funds. Classifications are based on the headquarter location of the
fund, not the location of venture capital firm. The sample excludes fund of funds.

About Thomson Reuters

Thomson Reuters is the world's leading source of intelligent information for businesses
and professionals. We combine industry expertise with innovative technology to deliver
critical information to leading decision makers in the financial, legal, tax and
accounting, healthcare and science and media markets, powered by the world's most
trusted news organization. With headquarters in New York and major operations in London
and Eagan, Minnesota, Thomson Reuters employs 55,000 people and operates in over 100
countries. For more information, go to .

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 2008 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 .

No comments:

Post a Comment