US venture fundraising is going to take a rest for a while

US venture fundraising is going to take a rest for a while

Now, there are many bad news out there regarding this crappy economy (there are also some good news too:  here and there).

This is another one on top of the bad news list and regards to “oil” which makes up part of the economies function (at least in US): venture capital.
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National Venture Capital Association reports (according to Reuters) that in Q4 the fundraising dropped about 71% from the same period in 2007 (3.8 billion vs. 11.7 billion in Q4 2007) and a substantial decline comparing with Q3 2008.

For the whole year 2008 the funds raised were in amount of $28 billion comparing with the year prior ($35 billion).

The champions of venture capital funds in 2008 are Sequoia Capital ($929 million raised), Austin Ventures ($900 million raised), Essex Woodlands Health Ventures Fund ($892 million raised). There were 18 funds that raised worth $500 million or more.

There were only six IPO exits last year (the worst in 30 years), 260 M & A transactions (the worst in 5 years).

The largest IPO of 2008 was Rackspace Hosting ($187 million). All but one of 2008 IPOs are trading below their offering price.

The largest M & A transaction of the year 2008 was EqualLogic, Inc, a developer of storage area network solutions, which was purchased by Dell, for $1.4 billion in January (the largest of the Q4 was the purchaing of Bill Me Later, online payment solutions provider, by eBay – $945 million).

The most significant impact of the US financial crisis on the venture capital industry has clearly taken place in the exit markets,” said Mark Heesen, president of the NVCA.

As it looks now, the trend could continue in 2009 also until the exit markets re-open and the pipeline is cleared. Let’s hope that pipeline is cleared sooner rather than later.

How are the things in Europe?

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