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US venture firm Q2 fundraising decreases 54%

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July 13
5:52 AM 2013

There was a decline of 54% in fundraising by US venture-capital firms in the second quarter. This was equivalent to a decrease of US$2.88 billion. This quarter was also considered to be the weakest for fundraising during almost two years.

According to Thomson Reuters and the National Venture Capital Association (NVCA), there were 44 firms who held a fundraising. For the same period last year, there were 51 firms who had fundraising activities.

This decrease in fundraising activity could be attributed to the underperformance of returns for venture capital. According to Cambridge Associates, a return of 6.9% was the latest available for the 10-year period ending December 31. This rate was lower in comparison to the 8.5% returns for the NASDAQ composite index.

"Many long-standing, pedigree venture firms are heeding the guidance from limited partners and raising smaller, more agile funds," said NVCA president, Mark Heesen. However, Heesen added in a press release that "Counterbalancing this trend is the recent uptick in the venture-backed IPO market which, if sustainable, may very well draw more dollars into the asset class in the coming year."

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