The multi-year trend of venture industry consolidation has continued in 2013, with a smaller number of firms raising a larger percentage of the capital raised, sister publication Venture Capital Journal reported.
In each of the first two quarters of the year, the five largest venture capital funds accounted for more than half of the fundraising total. Big funds continued to dominate in Q3, led by Greylock Partners’ $1 billion Fund XIV.
Taking a closer look at the numbers, however, it’s clear that while big firms are staying big, only a handful of VCs are actually raising funds that are significantly larger than their previous ones.
An analysis of fundraising data from Thomson Reuters (publisher of VCJ) found few examples of new funds of $40 million or more that had scaled up more than 20% from the last time on the fundraising scale. Of those, just one large fund, from Third Rock Ventures, is healthcare-focused. The others are technology or cross-sector investors.
In the following set of profiles, we look at five of the firms that have seen the largest increases in fund size, focusing on capital raised, recent investments and exit track records.
Third Rock Ventures
Latest fund: Third Rock Ventures III, closed in March with $516 million.
Prior fund: Third Rock Ventures II, closed in 2010 with $426 million.
Focus: Healthcare, with an emphasis on companies developing platforms for multiple products.
Prominent investments: Foundation Medicine (in registration for an IPO), Alnara Pharmaceuticals (acquired by Eli Lilly & Co. in 2010), Lotus Tissue Repair (acquired by Shire in 2013).
Changes: In conjunction with Fund III, the firm promoted Mark Goldsmith, a former venture partner, to partner. The firm also brought on James Geraghty, formerly of Genzyme, as entrepreneur-in-residence, and said Steven Paul, former president of the Lilly Research Laboratories, is taking on a broader role as venture partner. Daniel Lynch, former CEO of ImClone Systems and Third Rock entrepreneur-in-residence, and John Maraganore, CEO of Alnylam, were named venture partners.
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