Venture funds in sharp decline - Westfair Communications

Venture capital firms nationally raised $6 billion in the third quarter, but the number of firms receiving capital declined markedly.

In the second quarter of this year, venture funds raised $9 billion in capital, according to Stamford-based Thomson Financial and the National Venture Capital Association. Funds raised $5.4 billion in the third quarter of 2006.

Through the first three quarters of 2007, venture capital firms raised $20.7 billion, 79 percent of the amount they raised in the same period of 2006.

Just eight firms created new funds in the third quarter, the smallest number since 1995. Including existing funds, just 59 funds in all received capital, the lowest number since 2001.

“We expect the number of venture capital firms raising funds to remain very stable and perhaps even decline during the next year as these venture capitalists focus on deploying the dollars that have recently been raised,” said Mark Heesen, association president, in a written statement. “The high percentage of early and balanced stage funds raised suggests a continued venture capital focus on growing young, startup companies from the ground up.”