Dollars raised by venture capital firms fell 17% in the third quarter, but more funds were able to find new money. In the three month period, 53 U.S.-based venture funds raised $4.98 billion, according to Thomson Reuters, publisher of this blog, and the National Venture Capital Association. In the second quarter, 43 funds raise $5.97 billion.
Capital concentration diminished during the period. The top five venture capital funds accounted for 55% of total fundraising in the third quarter compared to 80% in the second quarter of 2012, according to Thomson Reuters and the NVCA. Venture capital fundraising for the first nine months of 2012 reached $16.2 billion, a 31 percent increase by dollar commitments compared to the first nine months of 2011.
VENTURE CAPITAL FUNDS RAISED $5.0 BILLION DURING Q3’12
Number of Funds Increased 23 Percent Compared to Second Quarter
New York, October 9, 2012 – Fifty-three U.S. venture capital funds raised $5.0 billion in the third quarter of 2012, according to Thomson Reuters and the National Venture Capital Association (NVCA). This level marks a 17 percent decrease by dollar commitments and a 23 percent increase by number of funds compared to the second quarter of 2012, which saw 43 funds raise $6.0 billion during the period. The top five venture capital funds accounted for 55 percent of total fundraising this quarter, compared to 80 percent during the second quarter of 2012. Venture capital fundraising for the first nine months of 2012 totaled $16.2 billion, a 31 percent increase by dollar commitments compared to the first nine months of 2011 ($12.4 billion) despite a 13 percent decline by number of funds.
““While the dollars raised this quarter fell from Q2, we were encouraged by the increase in the number of firms who were successful in raising venture funds,” said Mark Heesen, president of the NVCA. “For the last several years we have watched carefully the consolidation of dollars into the hands of fewer firms. While more than half of the dollars raised this quarter were placed in five funds, it was less concentrated than previous quarters and allows for the disbursement of capital across a more diverse base of funds. We are hopeful that this uptick is not an anomaly, but demonstrates greater confidence by our limited partners in the asset class as a whole.”
There were 37 follow-on funds and 16 new funds raised in the third quarter of 2012, a ratio of 2.3-to-1 of follow-on to new funds. The largest new fund reporting commitments during the third quarter of 2012 was from San Francisco, California-based Forerunner Partners I, L.P., which raised $41.7 million for the firm’s inaugural fund. A “new” fund is defined as the first fund at a newly established firm, although the general partners of that firm may have previous experience investing in venture capital.
Third quarter 2012 venture capital fundraising was lead by Menlo Park, California-based Sequoia Capital U.S. Growth Fund V, L.P. which raised $950 million and GGV Capital IV, L.P. and New Enterprise Associates 14, L.P., which raised $565 million and $524 million, respectively.
The Thomson Reuters/National Venture Capital Association sample includes U.S.-based venture capital funds. Classifications are based on the headquarter location of the fund, not the location of venture capital firm. The sample excludes fund of funds.
Effective November 1, 2010, Thomson Reuters venture capital fund data has been updated in order to provide more consistent and relevant categories for searching and reporting. As a result of these changes, there may be shifts in historical fundraising statistics as a result of movements of funds between primary market & nation samples and/or between fund stage categories.
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About National Venture Capital Association
Venture capitalists are committed to funding America’s most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth. According to a 2011 Global Insight study, venture-backed companies accounted for 12 million jobs and $3.1 trillion in revenue in the United States in 2010. As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment. As the venture community’s preeminent trade association, NVCA serves as the definitive resource for venture capital data and unites its nearly 400 members through a full range of professional services. For more information about the NVCA, please visit www.nvca.org.