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Local Tech Wire
RESEARCH TRIANGLE PARK, N.C. – The recession continues to reverberate in the venture capital industry with new fund raising plunging to the lowest levels seen in years.
A mere 17 funds raised cash in the third quarter of this year, a total not seen since the third quarter of 1994, Thomson Reuters and the reported Monday.
Those funds generated $1.56 billion, the smallest amount since the first quarter when VCs raised $938 million.
Just a year ago, VCs closed 63 funds worth $8.5 billion.
“Anecdotally we are hearing that fundraising activity is accelerating as more firms that were waiting for economic recovery are beginning to formally seek commitments,” said NVCA President Mark Heesen.
The news isn’t likely to improve any time soon, she added.
“The reality, however, is that many limited partners are still determining their long term strategies in wake of the past year’s financial crisis and that slows the process down considerably. We expect commitment levels to remain modest for the remainder of 2009 with gradual increases beginning in 2010.”
Funding has fallen for two consecutive quarters from $4.8 billion in the first quarter to $1.97 billion in the second quarter and $1.6 billion in the thirds.
So far this year, 87 funds have closed on $8.4 billion from 224 and $28.6 billion in 2008.
Four new firms raised funds, down from eight in the second quarter but up from three in the first quarter.
Khosla Ventures raised the largest fund – $750 million.