Venture Fundraising Activity Climbs To Six Year High

Venture capital fundraising has been anemic for the past couple years. General partners hope to change that.

The number of venture funds seeking money worldwide grew to a six-year high in May, according to a report released Thursday from Preqin. As of May, 369 funds were on the road hoping to raise $50.5 billion in new capital, the report found.

That’s a 26% increase in funds and 20% increase in money from a year ago.

The number of active funds tops the totals of the past six years. The second most active year was 2007, when in May 353 funds hoped to gather cash, followed by 2009, when 341 funds were seeking money.

Yet, the total dollars being sought does not set a similar record. Venture firms hoped to raise $60.1 billion in May 2009. Fundraising in the United States that year ended up at $16.4 billion, according to the National Venture Capital Association and Thomson Reuters, publisher of this blog.

Most of the funds presently seeking cash are North American based. However, a surge of activity in Asia and in developing economies has pushed fundraising by these geographies ahead of Europe.

Presently 73% more funds with an Asian and rest-of-world focus are in the market raising money than European-focused funds, the report found. They are targeting 147% more money.

More than half of the money being raised is earmarked for funds with a broad, multi-stage focus. A quarter targets early stage and debt funds, and 22% is slated for expansion and later stage.

It is unlikely all the active funds will reach their goal. Venture capital firms in the United States raised only $4.9 billion in the first quarter, a 35% drop from a year earlier. Fundraising was similarly down in China.

For all of 2001, U.S.-based firms raised $18.8 billion, just over a third of this year’s ambitious $50.5 billion worldwide target.

Photo courtesy of Shutterstock.

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