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U.S. venture capital firms raised $4.1 billion from 56 funds during the third quarter of 2013, an increase of 28 percent compared to the level of dollar commitments raised during Q2 2013, and a 14 percent increase by number of funds, according to Thomson Reuters and the National Venture Capital Association (NVCA). Dollar commitments raised during the first three quarters of 2013 are down 29 percent from those raised in the same period last year. By number of funds, the third quarter of 2013 ranks as the strongest quarter for venture capital fundraising in 12 months. This quarter the top five venture capital funds accounted for 58 percent of total dollars raised.
|
Year/Quarter |
Number of Funds |
Venture Capital ($M) |
|
2009 |
159 |
16,122.0 |
|
2010 |
176 |
13,427.3 |
|
2011 |
186 |
18,981.3 |
|
2012 |
202 |
19,719.7 |
|
2013 |
144 |
11,635.5 |
|
3Q'11 |
66 |
2,116.0 |
|
4Q'11 |
53 |
6,105.0 |
|
1Q'12 |
61 |
4,812.3 |
|
2Q'12 |
51 |
6,319.3 |
|
3Q'12 |
60 |
5,233.9 |
|
4Q'12 |
47 |
3,354.2 |
|
1Q'13 |
45 |
4,273.5 |
|
2Q'13 |
49 |
3,231.9 |
|
3Q'13 |
56 |
4,129.8 |
|
Source: Thomson Reuters and National Venture Capital Association |
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“The slightly larger number of firms raising money in Q3 is an indication that there’s some improvement in distributions and prospects. The gradually improving IPO market, along with better quality exits on the M&A side, are signaling to limited partners that venture funds can still yield attractive returns,” said John Taylor, NVCA head of research. “Smaller fund sizes are not surprising as venture capitalists are looking to invest in less capital intensive sectors and are focused on deploying capital more efficiently.”
There were 40 follow-on funds and 16 new funds raised during the third quarter of 2013, a 2.5-to-1 ratio of follow-on to new funds. The number of new funds raised during the third quarter marks a slight decrease from the number of first-time funds raised during the second quarter of this year. By dollars raised, follow-on funds account for 89 percent of total dollar commitments during the third quarter of 2013. Over the past five years, follow-on fund dollars have accounted for 91 percent of total venture capital fundraising.
The largest new fund reporting commitments during the third quarter of 2013 was from Columbus, Ohio-based Drive Capital Fund I, L.P., which raised $181.0 million for the firm’s inaugural fund. A “new” fund is defined as the first fund at a newly established firm, although the general partners of that firm may have previous experience investing in venture capital.
|
No. of New |
No. of Follow-on |
Total |
|
|
2009 |
39 |
120 |
159 |
|
2010 |
57 |
119 |
176 |
|
2011 |
57 |
129 |
186 |
|
2012 |
66 |
136 |
202 |
|
2013 |
41 |
103 |
144 |
|
3Q'11 |
20 |
46 |
66 |
|
4Q'11 |
15 |
38 |
53 |
|
1Q'12 |
19 |
42 |
61 |
|
2Q'12 |
16 |
35 |
51 |
|
3Q'12 |
19 |
41 |
60 |
|
4Q'12 |
20 |
27 |
47 |
|
1Q'13 |
8 |
37 |
45 |
|
2Q'13 |
17 |
32 |
49 |
|
3Q'13 |
16 |
40 |
56 |
|
Source: Thomson Reuters and National Venture Capital Association |
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Third quarter 2013 venture capital fundraising was lead by Massachusetts-based Greylock XIV, L.P. which raised $1.0 billion and California-based Sequoia Capital U.S. Venture Fund XIV, which raised $552.9 million. The Greylock fund is the first U.S. venture capital fund to raise over $1 billion this year.
Methodology
The Thomson Reuters/National Venture Capital Association sample includes U.S.-based venture capital funds. Classifications are based on the headquarter location of the fund, not the location of venture capital firm. The sample excludes fund of funds.
Effective November 1, 2010, Thomson Reuters venture capital fund data has been updated in order to provide more consistent and relevant categories for searching and reporting. As a result of these changes, there may be shifts in historical fundraising statistics as a result of movements of funds between primary market & nation samples and/or between fund stage categories.
