U.S. Venture Fund-Raising Plunges

According to the National Venture Capital Association and Thomson Reuters, the level of VC fund-raising fell 71% in the fourth quarter of 2008, primarily due to the recession and risk aversion.

Venture capitalists raised $3.4 billion from investors in the quarter ended Dec. 31, compared with $11.7 billion in the same period a year earlier.

For all of 2008, U.S. VCs pulled in just under $28 billion from 211 funds, down 21.4% from the $35.5 billion raised in 2007.

“The drop in venture capital fundraising activity in the fourth quarter is not surprising for two reasons,” said Mark Heesen, president of the NVCA.  “First, the market uncertainty has compelled firms that were planning to raise a fund in late 2008 or early 2009 to hold back on fundraising efforts until economic conditions improve and institutional investors can recommit with confidence.  The second and less obvious reason is that many venture capital firms raised money in the last two years and are focused on deploying those funds.  With some notable exceptions, we can expect this slower pace to continue well into 2009.”

You can download the full report, Venture Capital Fundraising Q4 08 here.