Venture Capital Fund Raising
Venture Capital Fund Raising
Venture Capital Fund Raising Falls 63%
Fundraising by venture capital firms dropped all of 63% in the first half of this year compared to the first 6 months of 2008. Investors remain skiddish about forking over their money to venture funds during an uncertain economy. Venture firms were able to raise just $5.1 billion across 52 funds, a downward slide from the $13.6 raised by 115 funds in 2008.
“LPs have been cautious about all illiquid asset classes since Lehman collapsed in September,” said Kelly DePonte, partner at placement agent Probitas Partners Inc. “Many LPs we talked to said as early as last December that they planned to sit on the sidelines through the second quarter, and that is exactly what we have seen.”The venture capital industry faces plenty of questions as it deals with a moribund exit market and almost 10 years of poor returns. As a result, most venture strategies struggled.
“Venture didn’t cause the current crisis, but it is collateral damage,” DePonte said. “With no liquidity in the market leading to longer holding periods, VCs are much more focused on managing cash burn at current portfolio companies rather than raising new money for new investments.”
Venture capital firms are hoping that investors will return over the next six months and fundraising can begin to climb out of the hole it’s been stuck in for the last year.
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