US fundraising drops

Private equity fundraising in the US fell during 2001, marking the first such decline in almost a decade.

For the first time in almost a decade, private equity firms in the US suffered the first decline in new funds raised in just under a decade, according to an industry newsletter.
The $99.6bn raised in 2001, although the second-largest sum ever collected by the industry, represents a 43 per cent decline from the amount raised in 2000.

The research, published by the Private Equity Analyst and based on numbers compiled by VentureEconomics, showed that venture capital was down by 52 per cent to $35.7bn from $73.9bn in 2000. Six firms raised venture capital funds of $1bn or more last year, down from 19 such funds in 2000. Leveraged buyout and corporate finance funds fell 37 per cent to $46.7bn.

The newsletter added that fundraising could slow even further this year because of a significant overhang of committed capital as firms had collectively raised more money in the past two years than they had been able to invest.

Analysing the last ten years and excluding buyout funds shows that venture firms had actually invested faster than they had raised funds. These firms invested $120.9bn, while raising $109.8bn for the same period.