US venture capital firms raised USD3.6bn in the first quarter of 2010 from 32 funds, according to Thomson Reuters and the National Venture Capital Association.
This level marks a 31 per cent decline, by dollar commitments, compared to the first quarter of 2009, and a 44 per cent decline by number of funds.
It also represents the slowest opening quarter since 1993.
"There is no question that the bar has been raised for venture capital fundraising," says Mark Heesen, president of the NVCA. "Over the last two years, alternative asset allocations have declined and the exit market has suffered, putting venture firms in the unenviable position of communicating their value in an extremely challenging environment. Many firms have been waiting until the exit market improves before embarking upon their fundraising efforts. This wait has been considerably longer than many firms anticipated. Those firms that are successfully raising money today do have both a track record as well as vision for the future. As predicted, the next few years will see the industry consolidate with the strongest firms surviving."
There were five new funds and 27 follow-on funds raised in the first quarter of 2010, a ratio of over five-to-one of follow-on to new funds. The largest new fund reporting commitments during the first quarter of 2010 was Boston-based Longwood Founders Fund, which raised USD50.7m in its inaugural fund.
The largest funds raised during the first quarter of 2010 were Battery Ventures IX and Oak Investment Partners XIII, which both saw USD750m in fund commitments during the quarter.
