U.S. venture capital firms raised $15.2 billion from 120 funds in 2009, down 47% from 2008, making it the lowest fundraising year since 2003, according to Thomson Reuters and the National Venture Capital Association.
John Taylor, NVCA vice president of research, said in a telephone interview that many venture capital firms that stayed out of the fundraising market in 2009 will find themselves competing with other venture capital firms already scheduled to raise money in 2010.
“We have a record number of companies in the later stages in the venture capital life cycle,” Mr. Taylor said. “In most other business environments, they already would have been acquired and gone public.”
New Enterprise Associates 13 raised the largest amount in 2009 with $2.46 billion. Norwest Venture Partners was second with $1.2 billion in fund commitments.
The venture-backed exit market also improved slightly in 2009, with 13 venture-backed IPOs and 262 M&A transactions.
There were five venture-backed IPOs in the fourth quarter worth a combined $649.3 million, up from three in the third quarter valued at a total of $572.1 million.
M&A exit activity in 2009 was 67 with 36 disclosed deals averaging $215.9 million, the highest quarterly average since the fourth quarter of 2007.
Mr. Taylor said historically the market should be seeing 80 or more IPOs annually.
“There is some optimism that the public market will regain its appetite for these companies in 2010,” Mr. Taylor said, noting that it could happen “later in the year, once the investment community is able to digest everything that has happened in the last year and a half.”
