U.S. Venture firms raise far less, China firms raise more
U.S. venture capital firms raised $3.2 billion in the second quarter to invest in new companies, far less than the $8.1 billion that they raised in the second quarter of 2006, according to VentureOne.
The table at left shows how moribund fundraising is compared to most years except for the post-bubble dog years of 2003 and 2004. The quarter saw 15 new VC funds raised, compared to only 25 a year ago.
In China, meanwhile, new data shows that fund-raising by VC firms continues to boom. See chart below.
Some of the slowdown in the U.S. is coincidental, because many firms exploited the strong upturn in sentiment over the past two years to raise cash — and there’s simply fewer qualified VC funds left to raise money. Firms can live off of their funds for about three years or so. However, big investors are also clearly turning bearish on VC firms — the average fund hasn’t been performing that well lately. Many large institutions, such as public and private pension funds, are earmarking money for large buyout funds instead.
A more complete table of fundraising is shown at left. Venture firms raised a total of $6.36 billion during the first two quarters of the year, which is only half the amount raised during the same period last year. However, in 2006, five ‘mega’ venture funds raised more than $7.92 billion in capital alone and 2005 saw $2.6 billion raised by two super-sized funds, which distorts things somewhat.
Meanwhile, check out the Zero2IPO presentation here about fund-raising in China. It contains lots of other data about private equity and VC trends. Most of the arrows are pointing sharply upward.
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About the Author, Matt Marshall
Matt launched VentureBeat in September of 2006, with the realization that no one else was covering the entrepreneurial and tech innovation scene with the velocity or depth that he was. Prior to founding VentureBeat, he covered venture capital for the San Jose Mercury News from 2001 to 2006. In 2002, Matt was awarded "Journalist of the Year" by the Northern California Society of Professional Journalists. Prior to working at the Merc, he was a correspondent for the Wall Street Journal in Bonn, Germany from 1995 to 1998, and a writer for the Washington Post in 1994. Matt holds a PhD in Government and an MA in German and European Studies from Georgetown University. In addition to VentureBeat, Matt is also the Executive Producer of DEMO, the leading launchpad event for emerging technologies.
