Only 40 venture capital funds managed to raise money in the first quarter, the sparsest showing since the third quarter of 2003, according to data released today by the National Venture Capital Assn. Of those, just 3 were funds at new firms.
The total amount of dollars dropped as well, to $4.32 bn from $7.12 bn a year earlier, although that’s still better than the fourth quarter of 2008, when investors pledged a mere $3.52 bn.
NVCA President Mark Heesen said firms with the best track records were still able to take in money. But those track records are increasingly elusive: merger and acquisition activity hasn’t been lower since 1999, according to Dow Jones VentureSource, and the first three months of the year produced only $3.2 bn in exits via takeovers or public offerings.
“One and two years from now, we will see fewer venture capitalists in business, fewer firms, and smaller pools of money under management,” said Accel Partners’ Jim Breyer. Unlike after 2001, when a predicted VC shakeout never occurred, the endowments, and pension funds are feeling pressure from their other investments and will be less inclined to be generous in the near term, Breyer said.
