US venture capital firms raised USD2.9bn from 44 funds during the second quarter of 2013, a decrease of 33 per cent compared to the level of dollar commitments raised during the first quarter of 2013 but equal to the number of funds, according to Thomson Reuters and the National Venture Capital Association (NVCA).
The dollar commitments raised during the second quarter of 2013 is a 54 per cent decline from the levels raised during the comparable period in 2012 and marks the lowest quarter for venture capital fundraising, by dollars, since the third quarter of 2011.
The top five venture capital funds accounted for 55 per cent of total fundraising during the second quarter of 2013.
"The second quarter reflects not just the consolidation of the venture capital industry but also the overall contraction of fund size," says Mark Heesen (pictured), president of the NVCA. "Many long-standing, pedigree venture firms are heeding the guidance from limited partners and raising smaller, more agile funds. Consequently, dollar values of capital under management are declining from historical levels. Counterbalancing this trend is the recent uptick in the venture-backed IPO market which, if sustainable, may very well draw more dollars into the asset class in the coming year."
Second quarter 2013 venture capital fundraising was led by Massachusetts-based Matrix Partners X, which raised USD450m; California-based Scale Venture Partners IV, which raised USD300m; and Foundation Capital VII, which raised USD282m.
There were 29 follow-on funds and 15 new funds raised during the second quarter of 2013, almost a two-to-one ratio of follow-on to new funds. The number of new funds raised during the second quarter is more than double the number of first-time funds raised during the first quarter of this year, which was atypically low. By dollars raised, follow-on funds accounted for 89 per cent of total dollar commitments during the second quarter of 2013. Over the past five years, follow-on fund dollars have accounted for 91 per cent of total venture capital fundraising.
The largest new fund reporting commitments during the second quarter of 2013 was Massachusetts-based Sigma Prime Partners IX, which raised USD115.6m for the firm’s inaugural fund. A "new" fund is defined as the first fund at a newly established firm, although the general partners of that firm may have previous experience investing in venture capital.
