3 Reasons To Downplay the VC Fundraising Increase
Dow Jones today published VC fundraising data for the first half of 2010, showing a 13% bump over the first half of last year. This prompted headlines like: "VC Doesn't Look So Bad at the Half After All" and story ledes like "There’s good news for venture fundraising this morning." I hate to piss all over the parade, but this data is hardly worth celebrating. Here are three reasons why: 1. Bigger fundraising totals do not necessarily translate into better returns. For example, the high-water mark for VC fundraising was set in 2000, when funds secured over $100 billion. Lots of money, but it's also one of the worst-ever vintage years for VC funds in terms of performance. Cambridge Associates puts the pooled mean (net to LPs) at -1.26 percent. The only weaker vintage (five years or older) was 1999, which happens to have been the second-best VC fundraising year on record.
