Kleiner Perkins, Sequoia Slow It Down

Updated: Four firms that ranked among the top 10 most active U.S. venture firms in each of the first three quarters of 2008 didn’t make the top 10 list in the fourth quarter of last year, according to new Thomson Reuters’ data. It’s a notable bunch, too; those who slowed down are Kleiner Perkins and Sequoia Capital, along with InterWest Partners and Venrock Associates.

In the fourth quarter, Kleiner backed 11 companies, down from 26 in the third quarter; InterWest backed 13 companies, down from 17 in Q3; Sequoia backed nine companies, down from 19 in Q3; and Venrock invested in 13 companies, down from 18 in the third quarter.

Lots of other firms pulled back, too, including the two most active firms in the industry for all of 2008: Draper Fisher Jurvetson and New Enterprise Associates. DFJ backed 22 companies in the fourth quarter after investing in 40 in the previous quarter, while NEA backed 15 companies in the fourth quarter, down from 24 in third quarter.

Some VCs say the decline in Q4 numbers doesn’t indicate that they have slowed down. “There has been no change in strategy or market-facing activities at Venrock,” Ray Rothrock, a partner at Venrock, told me yesterday. “Deal flow is strong. I think it’s a coincidence [that Venrock’s deal numbers declined in Q4].”

Sequoia—which told its portfolio company CEOs in October to brace for a serious downturn— isn’t conceding that it has slowed its pace, either. When my editor, Larry Aragon, asked Michael Moritz in mid-November if his firm was making fewer investments, Moritz replied that “our doors are as wide open as ever.”

Meanwhile, Kleiner’s John Denniston tells me he doesn’t have a comment about whether or not the firm is taking a more measured approach to investing in this economy.

Only the GPs ultimately know whether they’re intentionally applying the brakes. Either way, given what looks to become a very prolonged recession, I’d guess the rest of the industry’s most active investors will follow their lead soon enough.

Speaking of, here’s a list of who did the briskest deal-making in 2008, according to preliminary Thomson Reuters data.

Ten Most Active U.S. VCs for 2008

 

 

 

 

Firm Name

Total no. of cos. backed in ’08

Avg. no. per quarter*

No. of cos. backed in Q4

Difference between Q4 and average

Draper Fisher Jurvetson

132

33

22

-33%

New Enterprise Associates

92

23

15

-35%

Intel Capital

81

20

18

-11%

Kleiner Perkins Caufield & Byers

79

20

10

-49%

Polaris Venture Partners

67

17

23

37%

Sequoia Capital

65

16

9

-45%

U.S. Venture Partners

65

16

24

48%

Warburg Pincus

55

14

17

24%

Atlas Venture

55

14

21

53%

Venrock Associates

54

14

13

-4%

InterWest Partners

54

14

13

-4%

 

 

 

 

 

Source: Thomson Reuters

 

 

 

 

*Numbers are rounded

Update: Full MoneyTree data was released early Saturday morning. Here you go:

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8 Comments

  • [...] be releasing their report on fourth quarter venture investments until later tonight, but Private Equity Hub has already published a list of the 10 biggest investors using the same data from Thomson Reuters. [...]

  • [...] the entrepreneurs that didn’t get their funding via PE_Hub : “In the fourth quarter, Kleiner backed 11 companies, down from 26 in the third quarter; InterWest backed 13 companies, down…. Lots of other firms pulled back, too, including the two most active firms in the industry for all [...]

  • [...] Private Equity Hub y Thomson Reuters han publicado sus respectivas listas de las firmas de capital de riesgo que más han invertido durante el último trimestre del 2008. [...]

  • This doesn’t paint the most accurate picture of deal activity in that it looks like both new and follow-on investments are counted (I doubt DFJ did 132 new deals in 2008). Perhaps the 4Q 2008 numbers are lower simply because many follow-on fundings have been deferred due to reduction in op-ex which is rational given the economy.

    Posting deal metrics on new deal activity would be very insightful.

    From the spreadsheet Q4 2008 seed funding was worse than 2007, but better than 2001-2006! That was surprising!

  • [...] in PE Hub on the drop off in venture capital funding in Q4 2008. The post attempting to prove that well known funds like KP and Sequoia have slowed done their investment pace in Q4. I would think it’s pretty obvious all VCs backed down in Q4 – just like everyone else, VCs [...]

  • Connie, venture investing always drops in Q4. Over two weeks are chopped off b/c of the holidays, and entrepreneurs are generally less likely to pitch between thanksgiving and christmas.
    DId you look to see if investing dropped in Q4 the last few years too? If not, try doing an ounce of homework next time…

  • actually, tim, in 2007, the fourth quarter was strong as ever, and activity dropped in Q108. thanks for your nice note, though.

    http://www.nvca.org/pdf/08Q1MTPressReleasewiresFINAL.pdf

  • Just Curious – Did anyone notice that Miasole is not on the list of largest VC investments in 2008? I thought they did a round for over $200mm mid-year? If someone can correct me, I’d appreciate it. Thanks!

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