Reports split on whether 2012 Q1 was great for VC funds

Dow Jones shows a 5% increase in capital raised in the US, NVCA reports 35% decrease

Technology trends and news by Krystal Peak
April 9, 2012
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The fundraising going on in 2012 sure seemed powerful, and one report out Monday said it was. Oddly enough, another report said it wasn't. Confused? So are we.

Dow Jones released a report Monday morning stating that in Q1 2012, US funds saw a 5% increase in capital raised and 34% pop in fund closings since the same period last year. Now that's a great way to start the year.

US venture firms raised $7 billion across 47 funds at the start of 2012, with 23 early-stage funds raising $1.6 billion, a 35% increase in fund closings and triple the amount as the same period in 2011. 

Dow Jones said that three early-stage funds accounted for a whopping 79% of the total.

Multi-stage fundraising was also strong for the quarter, with 17 funds raising $5 billion, a 13% increase in fund closings and 19% increase in capital raised. Some of the heavy hitters in this first quarter included the busy Andreessen Horowitz, which raised $1.5 billion in January for its Fund III. And in March when Tiger Global Management, raised $1.5 billion, it joined Andreessen Horowitz as the two firms accounting for more than half the capital raised. Charles River Ventures also raised $375 million for a new fund, as Bain Capital Ventures brought in $600 million.

“A few big firms continue to have no trouble raising large funds, as limited partners are sticking with what they see as safe bets when making their venture allocations,” said Zoran Basich, editor of Dow Jones VentureWire, in a statement. “But small firms are also finding some receptive LPs interested in investing in niche spaces, such as education, or specific geographic areas.”

Outside the U.S., Dow Jones reported that European venture funds raised $954 million for 11 funds, an 8% increase in capital raised with the same number of fund closings compared to the first quarter of last year. For the Europe market, early-stage funds attracted the capital, raising $769 million across eight funds -- an 8% decline in capital committed from the same period last year. And capital committed to multi-stage funds more than doubled to $105 million for two funds.

Another report out today, pulled together by Thomson Reuters and the National Venture Capital Association has some different data showing a decrease in the amount of capital raised by U.S. venture firms in Q1. This report shows 42 U.S. venture capital funds raised $4.9 billion in the first quarter of 2012, according to the report -- a 35% decrease in capital and 9% drop by number of funds compared to the first quarter of 2011 -- but it appears that this report may not be factoring in the same companies or early-stage firms.

There also are differences in how the reports allocate which country the funds are for since Dow Jones looks at the location of the VC firm and NVCA looks at the fund. I've reached out to the people behind both reports to see if we can't find out where the differences lie. 

"While the first quarter fundraising numbers represent a slower start than last year, venture firms appear to be more optimistic about the fundraising environment in 2012, especially those who have benefitted from the improving exit environment of late which has also been encouraging to our investors," said Mark Heesen, president of the NVCA, in the report. "Many venture firms are either now officially in the market to raise a fund or will enter in 2012. For these firms, it will be 'do or die' -- and the collective outcome of their fundraising efforts will lay the groundwork for the amount of venture capital available for investment in entrepreneurial companies the next decade."

The NVCA also said that there were 31 follow-on funds and 11 new funds raised in the first quarter of 2012, a ratio of 2.8-to-1 of follow-on to new funds.

Despite the discrepancy, it does appear that 2012 could be gearing up to be a substantial year for businesses working on VC funding since new funds are drawing in substantial dollars and established companies are attracting a lot of that dough. 

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