If entrepreneurs can find any consolation in the rough market for raising venture capital, it’s in the fact that the venture firms themselves are having difficulty raising cash as well.

The latest example of that is Aurora Funds, which just announced its initial closing on $35 million, or about half of the target for its Aurora IV fund. The firm had expected to reach that milestone by the end of last year after officially starting its fund raising at the beginning of September, according to managing partner Jeff Clark.

“With the meltdown in the (information technology market), investors were reevaluating their holdings and were slow to make decisions,” Clark says. “But after 9-11, everyone just put things on hold.”

Aurora primarily tapped investors who had worked with the firm before to get the $35 million. Duke Management Co., which handles the Duke University endowment funds, is the lead investor in Aurora IV, just as it has been in the three previous funds. Other early investors include Wachovia, Silicon Valley Bank, the North Carolina Biotechnology Center, SHV Holdings and Alexandria Real Estate Equities. All but Alexandria have invested with Aurora previously.

“It’s easier to start out with people you know, and now that we’ve had our first closing and people see that we’re for real, we can pursue new investors until we have our final closing,” Clark says. “We should be buttoned up with everything by the end of the year, unless something unforeseen happens.”

Three deals in the works

Some institutional investors are tightening the screws on venture firms, forcing them to slice their management fees and their carry – the cut they receive when cashing out of portfolio companies – which is contributing to the difficulty in raising new funds. But Clark says Aurora’s backers are operating under the same terms in the new funds as they have in previous funds.

“I think you’re seeing that (tougher terms from investors) in cases where funds took advantage of the booming market to raise their fees,” he says. “We’ve always dealt with our investors on the same terms.”

Aurora already is working on three deals out of the new fund, including leading the first-round financing for Crop Solutions, a Morrisville company that uses advanced technology to develop chemicals to protect crops from diseases, weeds and insects. Clark declines to say how much will be involved in that round or to name the other two companies in line for funding. He expects all three deals to close in a few weeks.

The firm also has about $20 million left in its earlier funds to contribute to follow-on rounds among its current portfolio, which includes Merix Bioscience, Norak Biosciences, Cogent Neuroscience, StemCo Biomedical and TriVirix International.