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Venture fund raising plunges in 2Q – Both in number of funds, value

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The number of new venture fund closings fell to the lowest level in 13 years in the second quarter of 2009, new figures from the National Venture Capital Association and Thomson Reuters show.

The amount of money raised reflected that declining number with only $1.7 billion being added to VC tills.

The 25 fund closings is the smallest number since 21 in 1996.

The fundraising total is the lowest since $938.1 million closed in the first quarter of 2003.

After six months, the VC industry has raised $6.3 billion and is in danger of having its lowest yearly fund-raising total since $14.9 billion in 1997.

“The slower venture fundraising activity is no surprise given the current environment,” said Mark Heesen, president of the NVCA, in a statement. “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.”

At lne southeast fund, the Georgia research Alliance, did raise new money. it closed on $18.75 million this spring.

The NVCA-Thomson numbers are similar to those reported last week by Dow Jones Private Equity Analyst. Through the first six months of this year, Dow Jones reported $6.1 billion in new funds; the NVCA and Thomson Reuters reported $6.3 billion.

A year ago in the second quarter, 82 funds raised $9.3 billion, according to NVCA and Thomson Reuters. In the first quarter this year, 49 funds closed on $4.6 billion.

The number of new funds, eight, did reach a four-quarter high in terms of ratio to existing funds, 17, in the second quarter. NVCA and Thomson Reuters reported only three new funds out of 49 total in the first quarter.

VC fund raising by years:

1. 2004: 211 funds, $19.2 billion

2. 2005: 239 funds, $28.8 billion

3. 2006: 241 funds, $32 billion

4. 2007: 251 funds, $36 billion

5. 2008: 221 funds, $28.4 billion

6. 2009, first six months: 70 funds, $6.3 billion

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