Fund-Raising By U.S. Venture Capital Funds Fell 55% in 2009: We Have the Boston, San Diego, and Seattle Details, Too

1/11/10Follow @bvbigelow

It’s probably not much consolation for the entrepreneurs who tried to raise venture funding last year, but U.S. venture capital firms raised much less money from their institutional investors in 2009 than they have in recent years.

New figures from Dow Jones LP Source show that fund-raising by venture firms in 2009 fell almost 55 percent compared to 2008, with 120 funds raising slightly more than $13 billion nationwide. In 2008, 204 VC firms raised a total of $28.7 billion from pension funds, university endowments, insurance companies, wealthy individuals, and other investors. It hasn’t been that slow for VCs since 2003, according to Dow Jones.

The drop in VC fund-raising reflected a broader decline across the U.S. private equity spectrum, with buyout firms, funds-of-funds, and mezzanine firms all showing precipitous drops last year. Altogether, Dow Jones says 331 U.S. funds raised a total of $95.8 billion in 2009—down a staggering 68 percent from the $299.9 billion that 508 funds raised in 2008.

It was the first time in six years that private equity firms raised less than $100 billion. Bear in mind, though, that fund-raising by venture firms in 2008 was approaching a record pace until the fourth quarter, when the collapse of Lehman Brothers precipitated a plunge in PE fund-raising.

The only category showing an increase in fund-raising was the secondary firms that specialize in paying bargain-basement prices to take over the companies that conventional VCs are forced to throw overboard. Here’s a breakdown of fund-raising by firms in Xconomy’s cities, as well as nationwide totals for each of the five PE fund categories:

—The Boston region showed the strongest activity by far, with 34 PE funds raising almost $10.4 billion in 2009, according to the Dow Jones figures. More than … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • http://www.globalcaplaw.com James C. Roberts III

    Interesting numbers put in context. Other factors raise some questions:

    1. Is the trend suggested by these numbers a realization of the predictions last year that half the VC/PE funds would disappear because there was too much money chasing too few deals?

    2. How does this compare with VC/PE raises in other countries or regions, especially the EU and China?

    3. Whither greentech/cleantech VC investment?

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