A Look At 2011 Venture Fundraising: Industry Poised For 9 Year Record Deficit, But New Fund Creation Was About Average: Slideshow

Venture fundraising was rather unimpressive last year, right?

The answer has more nuances than you might realize. First off, the $18.2 billion raised was above the median of the past 11 years. That median was $17 billion.

What’s more, the number of new firms that raised their inaugural fund was about average for the past nine years, according to data from the National Venture Capital Association and Thomson Reuters, publisher of this blog. Forty-nine closed during the year, compared with the annual average of slightly less than 52. By these measures, the year can hardly be judged a disaster.

On the other hand, there is little to write home about overall fund participation in 2011. The industry appears to be consolidating. The 169 funds receiving money from LPs is well below par for the past decade, and the number of existing firms raising successor fund was the lowest in 11 years.

According to the NVCA and Thomson Reuters data, 169 funds raised money during the year, compared with a 10-year average of 197. Of these, 120 were from existing firms. This is up from 2010, but well below the 169 of 2007 and the 159 of 2008

Perhaps most alarming is the year’s funding deficit. Through three quarters, venture capitalists spent $3 billion more funding companies in 2011 than they raised from limited partners. If fourth-quarter investing turns out to be the average of the first three quarters, that deficit will rise to $10 billion, the second biggest in the past 11 years.

For those of you keeping score, seven of the past 11 years had fundraising deficits while three had a fundraising surplus. This analysis compares money raised to money invested.

In the following slideshow, we take a look at the data described above. One caveat. The data for some of the earliest years of this analysis come from press releases on the NVCA Web site. Fundraising totals appear to be revised from time to time as new information comes in. So some of the numbers may have been revised since their initial release.

[slideshow]

[slide title=”2011 Venture Fundraising Was Above $17 Billion Median Of Past 11 Years”]

[slide title=”But The Number Of Funds Raising Money Was Below The 10 Year Average Of 197″]

[slide title=”Firms Raising Their First Fund Was Near The Nine Year Average Of 52″]

[slide title=”But The Number Of Existing Firms Raising Funds Was Near A Decade Low”]

[slide title=”And With Venture Investing Rebounding From Its 2009 Low”]

[slide title=”The Fundraising To Investment Deficit Continued In 2011″]

[/slideshow]