19 Apr 2007
Venture Capital Fundraising Activity Continues At Lower Levels In Q1 2007
Early Stage Funds Drive Fundraising
New York, NY
Venture capital fundraising activity slowed in the first quarter of 2007
with fifty-six venture funds raising $4.9 billion according to Thomson
Financial and the National Venture Capital Association (NVCA). While the
first quarter saw a marked increase from the fourth quarter of 2006,
venture fundraising during the first three months of 2007 was at the lowest
level for an opening quarter since the first quarter of 2004.
"These lower fundraising levels relative to recent quarters are expected to
remain steady in 2007 as many firms recently closed funds in the 2004-2006
cycle,” said Mark Heesen, president of the NVCA. “Yet there will be a group
of firms that choose to raise money in the ‘off-cycle’ which will keep
overall quarterly levels in the $4-5 billion dollar range. Most firms that
have raised money are keeping their fund sizes at reasonable levels which
bodes well for the promise of future returns to limited partners."
Venture funds in the first quarter collectively raised 19.5% more than
those in the fourth quarter of 2006, when fifty-six funds took in $4.1
billion in commitments. However, when compared to the first quarter of
2006, this quarter posted a 25.7% decline.
View release with tables.
Venture fundraising by investment stage focus followed a familiar pattern
in the quarter. Thirty-five early stage vehicles raised $2.6 billion, or
53% of the quarter’s entire venture commitment. Among these funds were
Venrock Associates V at $528 million, which was the second largest venture
fund raised in the quarter and Draper Fisher Jurveston Fund with $435
million.
“Illustrating the important role venture capital plays in promoting
innovative companies, early stage vehicles continue to comprise the largest
percentage of funds raised this quarter” said Alex Tan, Global Private
Equity Research Manager at Thomson Financial.
Ten balanced funds raised $1.2 billion, led by MPM BioVentures IV with $550
million, the largest fund raised this quarter, and RRE Venture IV with $162
million. Seven later stage funds totaling $556.7 million and three
expansion-focused funds with $431.5 million rounded out the quarter’s
numbers.
Follow-on funds continued to be raised to first time funds at an
approximate 3-to-1 ratio. Only thirteen new funds were raised in the
quarter, compared to forty-three follow-on entities.
Note: Beginning in the first quarter of 2007, buyout and
mezzanine fundraising will be distributed in a separate release prepared by
Thomson Financial.
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listed on the New York and Toronto stock exchanges (NYSE: TOC; TSX:
TOC).
The National Venture Capital Association (NVCA) represents
approximately 480 venture capital and private equity firms. NVCA's mission
is to foster greater understanding of the importance of venture capital to
the U.S. economy, and support entrepreneurial activity and innovation.
According to a 2006 Global Insight study, venture-backed companies
accounted for 10 million jobs and $2.1 trillion in revenue in the United
States in 2005. The NVCA represents the public policy interests of the
venture capital community, strives to maintain high professional standards,
provides reliable industry data, sponsors professional development, and
facilitates interaction among its members. For more information about the
NVCA, please visit www.nvca.org.
Contacts
Emily Mendell
National Venture Capital Association
Tel: +1 610.565.3904
Email
Matthew Toole
Thomson Reuters
Tel: +1.646.223.7212
Email