Mo’ money, fewer funds: 182 U.S. VC firms raised $20.6 billion in 2012, most since 2008

Mo’ money, fewer funds: 182 U.S. VC firms raised $20.6 billion in 2012, most since 2008

According to a new report from Thomson Reuters and the National Venture Capital Association (NVCA), U.S. venture capital firms raised $20.6 billion from 182 funds during full year 2012.

That’s a nearly 3-percent drop by number of funds compared to full year 2011, and a much steeper 18-percent decline compared to 2008.

That said, the $20.6 billion raised in 2012 exceeds the total of capital raised by U.S. VC firms in the three years prior. Only 2008 saw $25,6 billion raised, but again, that was from way more funds – namely 215.

Compared to full year 2011, the increase by dollar commitments was roughly 9 percent.

2008: 215 funds raised $25,577.2 (in millions)
2009: 162 funds raised $16,187.9 (in millions)
2010: 176 funds raised $13,669.8 (in millions)
2011: 187 funds raised $18,745.7 (in millions)
2012: 182 funds raised $20,569.9 (in millions)

There were 127 follow-on funds and 55 ‘new’ funds raised during the full year 2012. The report’s sample excludes fund of funds.

During the fourth quarter of 2012, 42 U.S. venture capital funds raised $3.3 billion, a 35-percent decrease by dollar commitments and a 25-percent drop by number of funds compared to the third quarter of 2012, which saw 56 funds raise $5.1 billion during the period.

VC fundraising in Q4 2012 was led by Menlo Park, CA-based Sequoia Capital, whose ‘Global Growth Fund’ raised $700 million.

NVCA president Mark Heesen commented on the report:

“The venture capital fundraising environment has settled into a ‘new normal’ which is characterized by a barbell structure of larger funds which are stage and industry agnostic on one end, and smaller, early stage, industry or region specific funds on the other.

It is on these two ends of the spectrum where capital is concentrating and successful firms are raising follow-on funds. Simultaneously, new funds continue to enter the asset class, almost exclusively at the smaller end of the spectrum.

This structure, coupled with increasingly discerning limited partners, has kept the overall size of the venture industry below $25 billion each year since 2009, a size that many believe to be optimal for successful investing and maximizing returns.”

Earlier this month, another report by Thomson Reuters and the NVCA revealed there were fewer exits from venture-backed firms in 2012, but their value was higher, on average.

Initial public offerings from venture-backed companies raised close to $21.5 billion from 49 listings in 2012, largely driven by Facebook’s IPO.

Acquisitions of venture-backed companies were right on par, also totalling nearly $21.5 billion for full year 2012. This was, however, an 11 percent decline from full year 2011.

Image credit: Thinkstock

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