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2010 Venture Fund Raising Drops to Seven-Year Low

Loose bills of multiple=According to a report by Dow Jones LP Source, venture capital (VC) companies in 2010 raised $11.6 billion in 119 funds, a decline of 14 percent compared to the $13.5 billion raised by 133 funds in 2009, and the lowest amount raised in seven years. VCs have been among the traditional equity funders of start up science and technology companies.

The drop in fund raising was particularly steep in the fourth quarter of 2010, where 15 funds brought in $2.4 billion, a 48 percent decrease compared to the same quarter in 2009. The decline in VC fund raising reflects a similar weakness in the broader private equity markets that include VCs. According to Dow Jones LP Source, 336 private equity funds raised $86 billion in 2010, down 16% from 2009.

Late-stage funds — those that provide financial support for newer companies with more of a track record — were the only bright spot in the report. Eight late-stage funds raised $1.5 billion in 2010, a 68 percent jump from the $887 million raised by nine funds in 2009. In the fourth quarter of 2010, late-stage funds raised $390 million, nearly tripling the amount raised during the same period in 2009.

Among the early-stage VCs, 73 early-stage funds brought in $4.8 billion in 2010, a 12 percent drop from 2009. Multi-stage funds, that support early- and late-stage companies, accounted for the majority of venture capital raised in 2010, with 38 funds collecting $5.4 billion, down 26 percent from 2009.

Read more: Fewer Venture Funds Raise More Capital in Q3 2010

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