Venture capital fundraising jumped more than 25 percent higher in the second quarter from the first three months of the year, the National Venture Capital Association and Thomson Financial reported Monday.
Sixty-eight funds raised $7.184 billion, up from 71 funds raising $5.59 billion to open the year.
Leading the increase were 10 funds focused on expansion stage deals. They raised $2.8 billion, which shattered the previous record of $1 billion raised by three funds in the first quarter of 2000, the NVCA and Thomson said. Insight Venture Partners VI raised a third of that record total with $931.4 million.
Funds raised by early-stage VCs declined.
“Early stage companies will always be a cornerstone for venture capital,” said Alex Tan, global private equity research manager at Thomson Financial, “But venture capital firms may be seeing opportunities in established companies with proven traction in the marketplace. There is an attractive upside to these companies, as well.”
The overall quarterly bump, however, produced a total that was only half the $14.1 billion raised by 74 firms in the same quarter of 2006.
Regional funds that were part of the second quarter total included Noro-Mosely Partners in Atlanta and the IDEA Fund in Research Triangle Park. Noro-Moseley has closed on some $110 million of a new fund it expects to total more than $200 million. IDEA Fund, which is the for-profit arm of NC IDEA, is raising some $20 million.
The Aurora Funds in Durham is also said to be raising a new fund of over $100 million.
Mark Heesen, president of the NVCA, described the quarterly fund raising as “prudent.”
NCVA expects venture funds to raise about $25 billion this year. If so, that would be the lowest annual total in three years, down from $30 billion in 2006 and $28 billion in 2005.
“The venture capital industry is enjoying a healthy but prudent fundraising environment,” Heesen said. “Many VC firms finished raising their funds in the 2004-2006 time period and are now investing, especially at the seed and early stage levels, but there are others who are quite active on the fundraising trail.
“The level of dollars raised by the firms suggests a continued demand by institutional investors for quality venture capital investment opportunities,” he added. “A few larger funds drove the fundraising this quarter, with the top 10 funds accounting for almost 70 percent of the total.”
Recent quarterly fundraising totals as compiled by NVCA and Thomson:
2Q 07: $7,184.7 billion (68 funds)
1Q 07: $5,590.4 billion (71 funds)
4Q 06: $4,701.7 billion (61 funds)
3Q 06: $5,417.1 billion (65 funds)
2Q 06: $14,109.6 billion (74 funds)
1Q 06: $6,654.7 billion (74 funds)