Very Strong VC Fundraising Trends

Venture fundraising rebounds, topping $7 Billion

By WRAL Tech Wire

Venture capitalists are raising new money at the fastest rate since 2001, according to two reports issued recently.

Dow Jones LP Source says VCs raised $7.7 billion, nearly double the $3.9 billion raised in 2010.

Meanwhile, Thomson Reuters and the National Venture Capital Association say the VCs raised $7.1 billion compared to just over $4 billion a year earlier.

Both totals are the best for the first quarter in a decade just before the “dot com” and telecom crash.

While Dow Jones reported that the number of fund closings at 25 was the lowest for an opening quarter since 2003, it also said a number of small funds were raised.

“The first quarter’s fund-raising numbers show that established firms without major blemishes can still raise large funds while others face a tough sell,” said Scott Austin, editor of Dow Jones VentureWire. “With some of the larger U.S. venture funds closed and the industry with more than half the 2010 fund-raising total already in its pocket, the next couple of quarters will tell us if limited partners hit their spending limit for venture funds or will continue to commit capital to the asset class.”

The Thomson Reuters NCVA report said 36 funds were closed.

“This year will be a defining one as many venture capital firms will be fundraising, some of whom have been waiting for the investor climate to improve before going out,” said NVCA President Mark Heesen in a statement. “While it’s encouraging to see the increase in dollars this quarter, much of that was driven by several larger, established funds. We would like to see a similar increase in the number of firms successfully closing funds as the year progresses.”

Early-stage funds raised across a total of 16 firms netted $3.9 billion, according to Dow Jones. A year earlier, early-stage deals generated $736 million.

Later-stage funds pulled in $1.5 billion compared to zero a year ago.

According to Thomson Reuters, much of the fund raising was done by Bessemer Venture Partners at $1.6 billion, Sequoia Capital at $1.3 billion and JP Morgan at $1.2 billion.