Venture-Capital Fundraising Drops to Lowest Since ‘03

SpringMountain

Oct. 12 (Bloomberg) -- Venture-capital fundraising dropped to its lowest point in six years during the third quarter as financial turmoil continued to buffet universities and pension funds’ investments in startup companies.

Venture firms raised $1.56 billion in the quarter, the National Venture Capital Association said in a statement. The number of dollars committed was the lowest since the first quarter of 2003, while the 17 investment pools raised were the fewest since the third quarter of 1994.

Fundraising in the venture-capital industry has been buffeted by the slowing market for initial public offerings, Ray Rothrock, a partner at Palo Alto, California venture firm Venrock said in an interview last month. There have been only 14 IPOs of U.S. startups since the end of 2007, according to NVCA data.

“Everyone is still on the sidelines,” waiting for more evidence that the economy has bottomed out, NVCA president Mark Heesen said in an interview. “No one is dipping their toe in the water yet.”

Fundraising may have fallen to its lowest point this quarter, since several firms have almost finished raising money, Heesen said. What he’s heard at recent conferences convinced him that investors still are interested in venture capital, Heesen said. Negative returns overall since the Internet bust earlier this decade haven’t eliminated that interest, he said.

“There will be pent-up demand at some point,” he said.

Two new funds account for 60 percent of the money raised. Menlo Park, California-based Khosla Ventures got $750 million to invest in clean-technology companies, the NVCA said. Khosla was founded by former Kleiner Perkins Caufield & Byers partner Vinod Khosla. Draper Fisher Jurvetson, another Menlo Park firm, collected $196 million during the quarter, the association said.

SpringMountain

This market is so boring today.....