U.S. Venture Capital Fundraising Drops by Half

In the second quarter of 2010, 38 venture capital (VC) firms in the U.S. raised $1.9 billion, a decline of 49% compared to the first quarter of 2010 and the lowest level of financial commitments since the third quarter of 2003. These results were reported in a survey released today by National Capital Venture Association and Thompson Reuters.

Funds raised by VC firms have been dropping steadily in the past two years. In the second quarter of 2008, some 83 respondents reported raising $9.2 billion. In the second quarter of 2009, both the number of companies and funds raised shrunk considerably, with 36 firms raising nearly $4.4 billion. By the second quarter of 2010 — as reported in the current survey — the number of firms rose slightly to 38, but the amount of funds raised dropped even further to $1.9 billion.

The 38 VC firms in the survey included 26 companies providing follow-on funds — investments in ongoing enterprises or later-stage start-ups — and 12 firms offering funds for early-stage start-ups. According to the survey, the most funds raised during the second quarter of 2010 were by Venrock Associates VI, L.P. which raised $325 million and Polaris Venture Partners VI, L.P. which took in $213.8 million in fund commitments.