Record levels of venture capital funds were raised in the US last year, according to the latest VentureOne survey. Limited partners contributed $69.1bn to 249 funds compared to last year's $34.5bn that went into 202 funds.
Most of the cash went to established funds because investors have more confidence in them. John Gabbert, director of research at VentureOne, said: “These firms have repeatedly demonstrated considerable investing acumen and they adapt their strategies to suit the economic landscape, whether that means anticipating emerging technologies or looking further afield to overseas opportunities.
“The record amount raised for venture investment should provide ample funding for entrepreneurship in the near future, particularly since investors have grown more cautious over recent months.”
Fundraising in the fourth quarter totaled $18.1bn in new funds, a 5 per cent increase from third quarter’s $17.3bn, and more than any quarter besides the second quarter 2000.
Billion-dollar-plus venture capital funds raised increased six-fold from 1999 to18 including three funds that reached the $2 billion mark. TA Associates and New Enterprise Associates, both of Menlo Park, California, closed $2bn and $2.3bn funds, respectively, and Summit Partners of Boston, MA raised a $2.1 bn fund.
A VentureOne statement said: “Despite a recent slowdown in venture investment, first-time players in the venture capital arena are not only increasing in numbers but are also collecting more money from investors. In 2000, 75 firms raised initial venture capital funds totaling $7.6bn, compared to $4.5bn raised for 54 first-time funds in 1999.”
The study was conducted among funds focused on venture investment and does not include buyout funds or capital raised for strategic corporate development investment.
Last month's Moneytree survey published by PriceWaterhouseCoopers and VentureOne showed however that venture investment last year totaled $68.8bn. It also showed that investment fell by 18 per cent in the fourth quarter of 2000 to $13.7bn. The numbers of funds raised dropped considerably throughout 2000, with 56 funds closing in the fourth quarter, nearly a 45 per cent drop from the peak in the fourth quarter 1999, when venture firms closed 81 funds.