The third quarter saw the number of U.S. venture funds raising new cash decline by 29 percent to 55 funds, according to data from the National Venture Capital Association and Thomson Reuters. That compares to 78 new funds a year ago and 76 new funds in the second quarter of 2008. And 45 of that 55 were follow-on funds rather than new funds.
Each of those funds, though, raised a lot more money on average. The total raised for the third quarter was $8.1 billion, down only 6 percent from the third quarter of 2007 (but down 12 percent from the $9.2 billion raised in the previous quarter of this year).
And remember, all of this was before the financial meltdown of the past two weeks that had alarm bells ringing at every VC firm.
The three largest funds in the quarter were Sequoia Capital’s $930 million late-stage fund, Austin Ventures’ $900 million balanced-stage fund, and InterWest Partners’ $650 million early-stage fund. In general, more money is going towards later stage, proven businesses than early stage financings. (More at VentureBeat).
Update: Here are some iCharts with the same data:
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The financial crisis impacts everyone. The bad news is that VC’s will raise less in Q4. The good news is that cash rich investors are looking for the bottom and preparing to leap on the plethora of tremendous values in the marketplace. Tough times, but savvy investors will make out like a bandit.
-Dash
http://adecon101.blogspot.com/
You could REALLY do justice to this article by highlighting those 10 that managed to get new funds.
They must be exceptional; it would be interesting to follow their success as well as others who manage to get similar successes now.
Also, how well are the finalists in Techcrunch50 and DEMO doing.
Just TRY to imagine those conferences being held NOW as opposed to just a few weeks ago?!
YIKES! What a difference a very short time could have made in spirit and participation
very informative information. I would also like to follow these companies. Although gloomy I think Entrepreneurs have an advantage if they have the right product and the right connections. There is other money out there, just have to know where to get it.
It’ll be interesting (but not fun) to see if any of the LP’s renege on the capital commitments…
On another note, is Mint trying to tell VC’s they should budget better?
Well the easy answer is the economy. Venture capitalists will find it harder and harder to gain backing if even the richest people are loosing money due to the stock market and housing prices. This is a bad sign for the economy as a whole because that means less innovation and start-ups.
http://www.techNmore.com
The articles we read about a quarter from now will be about all the redemptions at VC firms.
Most of the brand name VC firms have raised new funds in the last 12 to 24 months, so it is expected the number of new funds will begin to trail off in the next 12 month and don’t see this as an indicator of the financial environment. Given that over $24B has been raised by early stage VCs in the last 24 months is going to really benefit any companies raising a Series A as there is a lot of capital at the moment.
There are two places to invest:
1) Early stage - new businesses that can be run lean and mean with a road map to generating real revenue. Even if its out 12 months. Includes experienced mgnt team.
2) Late stage/expansion - that are cash flow positive or near.
Companies that are VC backed with ZERO revenue in Series B or C are TOAST!!!!! PERIOD!
btw - was laughing when I saw Sequoia raised the largest fund ($930M) for late stage investments. I would love to see the private equity guys go after this segment of the market and kick their ASS. Unless, of course Sequoia considers $10M - $15M revenues late stage.
Hmm, could it be a marketing ploy that Sequoia is trying to “freeze” the market and scare everyone else so they can come in with a new fund and cherry pick?
Aaha, it’s a cold winter for those VCs now.
given today’s market close and the actions to defreeze the credit markets, I think it’s going to be a very short winter…..
what is it with people peddling their sites here? Don’t get me wrong i love mint, I have an account and use it. But if you want to peddle you site pay for ADS don’t spam comments.
fresh tasting MintSpam leaves commenters feeling clean.
Ah yes, that. Agreed.