Venture fund raising is down 11 percent for the first nine months of this year compared to 2006, according to the latest issue of Dow Jones Private Equity Analyst.
However, despite shaky times on Wall Street, overall private equity fund raising is on the increase.
Through September 30, private equity firms had raised $199 billion. And 405 funds are still “open,” seeking to raise another $165 billion, Private Equity Analyst reported Thursday.
Some $19 billion has been invested in 102 venture funds, a total that is down from $21.3 billion for the same time period in 2006. That higher amount also was raised by a smaller number of funds – 89.
Frontier Capital in Charlotte, N.C. bucked the downward trend with a newly raised fund of $115 million. Frontier had intended to raise $100 million. Meanwhile, in Raleigh, Hatteras Investment Partners has set a target of $500 million for its new fund. In Durham, Hatteras Venture Partners has raised $82 million in its new fund, and the target is $100 million.
Private Equity Analyst attributed the drop to fewer “mega” funds of $1 billion or more as well as a “failure” or many firms to deliver profitable exits – stock offerings, mergers or acquisitions – for investors.
But the news was not grim overall as fund raising in private equity markets surged to $199.4 billion through 295 funds. Both numbers are up over 2006 – 29 percent in money raised from $154.1 billion and 63 more funds.
In fact, Private Equity Analyst said that with more than 400 funds still raising money the total invested in 2007 is likely to top the record amount of $254.3 billion set last year.
Most money – $155 billion – went to leveraged buyout and corporate finance funds.
The shakiness of Wall Street apparently isn’t affecting investors, who are choosing to take a “long” view, according to Jennifer Rossa, the managing editor of Private Equity Analyst.
“Many limited partners recognize that private equity is a long-term investment,” she said. “They know that consistently committing capital to the asset class over time—and not just when market conditions are good—is the best way to generate a strong return."
In Europe, the publication reported that investment firms raised $73.1 billion, a 6 percent increase over the first nine months of 2006.