Monday, April 9, 2012


Quarter Represents Slower Start to a Critical Fundraising Year for the Asset Class

Forty-two U.S. venture capital funds raised $4.9 billion in the first quarter of 2012, according to Thomson Reuters and the National Venture Capital Association (NVCA). This level marks a 35 percent decrease by dollar commitments and a 9 percent decline by number of funds compared to the first quarter of 2011, which saw 46 funds raise $7.6 billion during the period. The top five funds accounted for nearly 75 percent of total fundraising this quarter as the number of funds raising money during the quarter fell to its lowest levels since the third quarter of 2009, when 36 venture capital funds saw new capital commitments.

Fundraising by Venture Capital Funds

Year/Quarter Number of Funds Venture Capital ($M)
2008 212 25,340.1
2009 160 16,400.7
2010 170 13,778.9
2011 181 18,767.6
2012 42 4,876.9
1Q'10 47 4,268.2
2Q'10 48 2,099.9
3Q'10 55 3,677.6
4Q'10 49 3,733.2
1Q'11 46 7,556.5
2Q'11 46 2,814.4
3Q'11 65 2,140.5
4Q'11 52 6,256.2
1Q'12 42 4,876.9

Source: Thomson Reuters and National Venture Capital Association

"While the first quarter fundraising numbers represent a slower start than last year, venture firms appear to be more optimistic about the fundraising environment in 2012, especially those who have benefitted from the improving exit environment of late which has also been encouraging to our investors," said Mark Heesen, president of the NVCA. "Many venture firms are either now officially in the market to raise a fund or will enter in 2012. For these firms, it will be 'do or die' - and the collective outcome of their fundraising efforts will lay the groundwork for the amount of venture capital available for investment in entrepreneurial companies the next decade."

There were 31 follow-on funds and 11 new funds raised in the first quarter of 2012, a ratio of 2.8-to-1 of follow-on to new funds. The largest new fund reporting commitments during the first quarter of 2012 was from Boulder, Colorado-based Fraser McCombs Ventures, L.P. which raised $16.9 million for the firm's inaugural fund. A "new" fund is defined as the first fund at a newly established firm, although the general partners of that firm may have previous experience investing in venture capital.

VC Funds: New vs. Follow-On

New Follow-on Total
2008 51 161 212
2009 40 120 160
2010 55 115 170
2011 56 125 181
2012 11 30 41
1Q'10 14 33 47
2Q'10 18 30 48
3Q'10 20 35 55
4Q'10 17 32 49
1Q'11 13 33 46
2Q'11 15 31 46
3Q'11 22 43 65
4Q'11 14 38 52
1Q'12 11 31 42

Source: Thomson Reuters and National Venture Capital Association

First quarter 2012 venture capital fundraising was lead by Menlo Park, California-based Andreessen Horowitz Fund III, L.P. which raised $1.5 billion, the firm's largest fund to date. Canaan Partners and Bain Capital Ventures each raised $600 million during the first quarter of 2012.

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.

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