US fundraising up in the third quarter

Private equity funds have seen high demand from LPs for the asset class.

According to a report issued by the National Venture Capital Association (NVCA) and private equity data provider Thomson Venture Economics, US venture capital fundraising in the third quarter reached $5.5 billion (€4.3 billion), a more than 78 percent increase over the previous quarter.

Forty-six venture funds were raised in total, including InterWest Partners IX, which garnered $600 million and closed in September, and Benchmark’s Europe II, a $375 million fund closed the same month as well. Follow-on venture funds continued to be the trend, the report states.

In addition, as of September 30, VCs had dispersed $15.3 billion into more than 1800 companies.

Meanwhile, 35 buyout and mezzanine funds attracted $14 billion (€11 million), falling slightly below the $15.7 billion raised in the second quarter for the category. However five private equity funds managed to meet or surpass the $1 billion mark in the third quarter, the largest being Providence Equity Partners V, which closed on $4.25 billion back in September.

“We are now seeing an extremely strong level of interest in the venture capital asset class from institutional investors,” said Mark Heesen, president of the NVCA, in a statement.  “However, it is critical at this time that venture firms exercise discipline and stay within the parameters of their fundraising targets so that those returns can continue.  If the industry begins to take more money than can be invested successfully, performance will suffer.”