U.S. Venture Capital Fund Dropped 9% in 2015, But Strong Pace Continued
Thomson Reuter/National Venture Capital Association (NVCA) released the latest report on Tuesday regarding the venture capital activities in 2015. The report shows a small decline of number of investment from the previous year. It also indicated a more selective investment to the startups.
Pension and Investment reported data from Thomson Reuter/National Venture Capital Association showed that U.S. venture capital firms raised $28.2 billion in 235 funds in 2015, with total capital raised down 9% from $31 billion in 2014 and the number of funds down 13% from 271 funds raised in 2014.
Thomson Reuters/National Venture Capital Association report is a regular report published by NVCA along with Thomson Reuters. It provides a consistent and relevant data of venture capital activities in the United States. NVCA is the flagship trade association for venture community in U.S. and Thomson Reuters is the world's leading source of intelligent information for businesses and professionals.
The report showed that fourth quarter investment record the strongest pace of investment in 2015 with $5 billion in 46 funds. The number is a 9% increase from third quarter that book a $4.6 billion in 61 funds. However, compared to the same quarter last year, it was a sizable decrease of 20% from $6.2 billion in 85 funds in fourth quarter of 2014.
Bobby Franklin as President and CEO of the association in an official press release of NVCA expressed his optimism, "Overall, the fundraising environment is quite healthy. It's been encouraging to see such a diverse mix of fund sizes in recent quarters, which demonstrates to us that the fundraising environment is becoming a lot more favorable for firms of all shapes and sizes."
The press release also emphasize the fourth quarter result of 26 follow-on funds and 20 new funds raised during the fourth quarter of 2015. However, number of new funds raised during 2015 showed a sharp 25% decrease from the number of first-time funds raised during 2014. The number of follow-on funds raised during the year fell 5% compared to a year ago.
This decrease in new funds signaled a more selective investment by venture capitalists to invest in startup companies. It is because Tiger Global raised the largest fundraising commitment of $2.5 billion in the fourth quarter. Another firms also raised a large sum in fourth quarter: Trinity Ventures XII, L.P. raised $400 million during the fourth quarter and USVP XI raised $300 million.
Meanwhile in the UK, Bloomberg reported that technology sectors in U.K.raise a record of $3.6 billion in venture capital funding, according to data compiled by London & Partners. The increase was boosted by growing peer-to-peer lending and online money transfer services
NVCA's latest report showed that U.S. venture capital firms are indicated to tighten its funding in 2016. However, the continuous strong pace of fundraising is signaling the firms is more more selective in giving their funding commitment.