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Q2 2014 Venture Fundraising Update

August 5, 2014

Both Number of Funds and Capital Raised Continues Upward Trajectory

Capital Continues to be Highly Concentrated with a Small Number of Funds

Number of New Funds Also Increases, but Only Accounts for 8% of Total Capital Raised 

Thomson Reuters and the National Venture Capital Association; 2014 Rolling Four Quarters through 06/30/14 

In Q2 2014, 78 US venture capital funds raised $7.4B according to Thomson Reuters and the NVCA. This represented the strongest fundraising quarter by number of funds since Q4 2007.  On a rolling four quarterbasis, the number of funds raised is up 36%, while capital raised is up significantly by 53%. Consequently, the average fundsize increased 8% on a rolling four quarter basis to $100MM as of Q2 2014.  PitchBook similarly reported 57 funds having raised $8.7B in Q2 (PitchBook Data, 2014).

However, the five largest funds raised in Q2 2014 continued to account for a significant 43% of total dollars raised, demonstrating continued polarization in the venture asset class among larger, longer-tenured firms and smaller, new firms.  Further, while the number of new funds raised represented 32% of the total for Q2 2014 and increased 44% on a rolling four quarters basis, the amount of capital raised by new funds only accounted for 8% of the total raised. The largest new fund raised in Q2 2014 wasfrom Lightstone Ventures in Boston, which reached $172MM. Conversely, the largest follow on fund raised was by Palo Alto based Norwest Venture Partners XII, LP at $1.2B.

“Although it moderated slightly from the first quarter, the second quarter fundraising environment for US venture capital firms was very strong compared to recent years,” added Bobby Franklin, President & CEO of the NVCA.  “Driven by the strong performance of venture backed companies in the public markets, we believe the solid distributions made to limited partners in recent quarters are resulting in new commitments to venture capital funds that can then be invested in American entrepreneurs.  This reinvestment cycle is not only good for the venture firms and their limited partners, but for the next crop of American innovators that want to take their businesses to the next level.”

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