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Q3 2013 Venture Fundraising Update

October 7, 2013
Number of Funds Raised Flat, But Capital Raised Down
Top 5 Funds Raised Account For 58% of Total Capital
Percentage of First Time Funds Also Down

Q3 2013 Venture Fundraising

Thomson Reuters and the National Venture Capital Association ; 2013 annualized from 09/30/13

In Q3 2013, 56 US venture capital funds raised $4.1B, which represents a slight 2% decline in the number of funds and a 7% fall in the amount of capital raised on a rolling four quarter basis.  Consequently, average fund size is also down 5% to $76MM.

The top five funds raised in Q3 2013 continued to account for more than half of the total capital raised, reaching 58% and demonstrating additional industry consolidation.  The largest fund raised was Greylock XIV, LP at $1B, while Sequoia Capital US Venture Fund XIV raised $553MM.

First time funds represented 29% of the number of funds raised in Q3 2013, down from 33% in 2012.  Additionally, first time funds accounted for only 11% of total capital raised, demonstrating continued consolidation in the venture market.  The largest first time fund raised in Q3 2013 was Drive Capital Fund I, LP at $181MM, founded by Mark Kvamme and Chris Olsen who were formerly with Sequoia.

John Taylor, head of research for the NVCA, commented that,

“The slightly larger number of firms raising money in Q3 is an indication that there’s some improvement in distributions and prospects.  The gradually improving IPO market, along with better quality exits on the M&A side, are signaling to limited partners that venture funds can still yield attractive returns.  Smaller fund sizes are not surprising as venture capitalists are looking to invest in less capital intensive sectors and are focused on deploying capital more efficiently.”


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