NEA, Oak lead Q2 fund-raising

Venture capital fund-raising increased during the second quarter thanks to a handful of mega-fund closings that have put 2006 on track to be the best year for fund-raising since 2001. VCs raised $11.2 billion from limited partner investors for 49 funds during the second quarter, compared to the $7.7 billion that 56 funds raised during the same period last year, according to fund numbers released today by Thomson Financial (publisher of PE Week) and the National Venture Capital Association.

Two mega-funds accounted for nearly half of the quarter’s total. New Enterprise Associates closed its 12th fund at $2.5 billion and Oak Investment Partners closed its 12th fund at $2.56 billion. Each firm substantially increased the size of its latest vehicle. Oak’s last fund, raised in 2004, closed at $1.55 billion. NEA raised $1.1 billion in 2003 for fund 11. The two funds invest across all stages and have even partnered on such PIPE deals as the $210 million investment in Tele Atlas in 2004. Oak’s fund, which was raised entirely in the quarter, is the biggest venture fund ever raised.

Also active in the quarter was VantagePoint Venture Partners, which raised more than $910 million, but has yet to officially close on VantagePoint Venture Partners 2006, which is targeted at $1 billion.

The amount that these large funds have raised has overshadowed what many smaller funds accomplished in the last three months. The Woodside Fund, for example, will launch a $150 million sixth fund this quarter (see story, page 3) following a recent exit of one of its portfolio companies. And RWI Ventures of Santa Clara, Calif., is halfway through raising its $100 million second fund.

Buyout firms are also having a banner quarter as 34 funds raised $30.7 billion, up more than 16% from the 63 funds that raised $26.4 billion during the same period last year. The industry is poised to collect more cash than any year since 2001 if current trends continue.

The Texas Pacific Group did nearly half of the quarter’s fund-raising, collecting $14 billion for TPG Partners V. The Blackstone Group raised $4.5 billion during the quarter to cap its fifth general fund with $15.6 billion in commitments. It is the largest private equity fund ever raised, and it already has committed to several buyout deals.