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Venture fund raising shows signs of life in first quarter

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RESEARCH TRIANGLE PARK, N.C. – Venture capital firms raised some $4.11 billion through the first three months of this year in a sign that a bit of a rebound may be underway.

Even though the total is less than funds raised in the last half of 2009, it was a big jump – 41 percent – over the first quarter of last year, according to new data from Dow Jones Venture Source.

Most of the money, $3.1 billion, went to 17 later stage funds.

Sixteen early stage funds also closed on new dollars, but the total was less than $1 billion.

2010 could produce an annual total exceeding the $13 billion of last year, but in 2008 venture firms raised nearly $29 billion.

Venture firms faired better than others in private equity. Overall fund raising fell 8 percent to $17.6 billion compared to the first quarter of 2009.

Just two years ago, private equity generated $65.9 billion.

However, there are some encouraging signs.

“The fundraising total is negligible, but the story behind the numbers is telling,” Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst, said. “Many commitments made during the first quarter were to funds early in their fundraising process unlike the same period last year when many closes were holdovers from 2008. We are seeing that limited partners are willing to put what they have to work, though they may not have much to invest.”

Venture Source noted that most of the new private equity - $9.7 billion - went to leveraged buyouts and corporate finance funds.

The venture fund raising represented a “small renaissance,” Venture Source added.

Some 34 funds raised money, up from 25 a year earlier.
 

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