VC Fundraising Slows in Third Quarter to $4.9B; PE Fund Rising Still Strong
After
a robust second quarter, Venture capital fundraising fell to the lowest
level in more than two years during the third quarter to $4.9 billion,
representing a 13% decrease from the same time
last year, according to data released by Thomson Financial and the
National Venture Capital Association. In the third quarter, 52
venture capital funds raised a total of $4.90 billion and 32 buyout funds
raised $22.86 billion.
|
Fundraising by
VC and LBO/Mezzanine Funds |
||||
|
|
Venture Capital |
Buyout & Mezzanine** |
||
|
Year/Quarter |
Number of Funds |
Venture Capital ($M) |
Number of Funds |
Buyout & Mezzanine ($M) |
|
2002 |
171 |
3,821.2 |
88 |
24,831.1 |
|
2003 |
145 |
10,683.5 |
91 |
28,846.8 |
|
2004 |
203 |
18,601.6 |
137 |
51,151.1 |
|
2005 |
207 |
27,012.4 |
177 |
96,028.0 |
|
2006 YTD |
158 |
25,419.0 |
103 |
83,977.1 |
|
3Q’05 |
62 |
5,611.1 |
63 |
22,481.7 |
|
4Q’05 |
74 |
8,368.9 |
52 |
32,954.7 |
|
1Q’06 |
65 |
7,098.5 |
48 |
25,767.1 |
|
2Q'06 |
62 |
13,420.5 |
41 |
35,345.3 |
|
3Q'06 |
52 |
4,900.0 |
32 |
22,864.7 |
|
Source: Thomson Financial & National Venture Capital Association *These figures take into account the subtractive effect of downsized funds. ** This category includes LBO, Mezzanine, Turnaround and Recapitalization-focused funds. |
||||
It's the least amount of money raised by VCs since the second quarter of 2004 when they raised $3.3 billion. The drop-off follows a exceptionally strong second quarter when VCs raised $13.4 billion -- more than any three-month period since early 2001. Still, venture capitalists rounded up more than $50 billion between this year to date and 2005.
Venture Capital Fundraising Highlights
-
Early stage venture capital funds were the most active in the third quarter with twenty-seven funds raising $3.5 billion.
-
Eighteen balanced stage funds raised $1.1 billion.
-
Domain Partners VII represented the most money raised in the quarter at $700M. In second place,
-
M/C Venture Partners VI raised $550M.
-
Follow-on venture capital funds continued to be the dominant fundraisers with 43 funds in the quarter.
-
Nine new funds also raised money in Q3, accounting for 17% of the total number of funds raised.
Buyout and Mezzanine Fundraising Highlights
-
Buyout and mezzanine funds remain on track to surpass the 2005 fundraising total.
-
The leading buyout fund was First Reserve Fund XI with $7.6 billion.
-
Thomas H. Lee Equity Partners VI, L.P. follows with $2.2 billion raised this quarter.
Despite the third quarter decline, private equity fundraising is still on track to surpass the full-year 2005 totals as well as the combined fundraising totals of 2002, 2003, and 2004, according to the report, primarily driven by the buyout market.
