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Venture Capital Firm Fundraising Concerns

Published: 1/8/2013 9:41:19 AM

 

Venture capital firms raised $20.3 billion in new funds in 2012, according to Dow Jones. This represented an 11.7% increase over 2011's tally of $18.17 billion.


While an increase of that amount is nothing to sneeze at, it is concerning on a number of fronts:


1. Over half the amount raised in 2012, $11.3 billion, was raised by just 11 funds, confirming the view that there has been a greater concentration of investment among fewer firms. This raises questions about the wider availability of funds for startups.


2. The venture backed IPO market, when removing the monster Facebook IPO which benefited a relative few number of VC firms, actually dropped from $6 billion in 2011, to $4.9 billion in public funds raised in 2012. This represented a drop of 18.3% year-over-year. Since IPOs are the mother's milk of venture capital, a tough market will crimp further investment initiatives.


3. The M&A market continued to show disappointment, with large acquirers sitting on trillions of dollars in cash due to continued global economic uncertainty. Opening up those crusty pursestrings is high on the wish list for venture capitalists in 2013.


Don Jones

VentureDeal

 

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Don Jones
CEO, VentureDeal

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