Q1 fund-raising slows

The first three months of the year were slow for venture fund-raising, but Q2 activity has already started off with some notable activity.

A total of 57 venture funds raised capital in the first quarter of 2008 in North America, a decrease of 31% from the 83 firms that raise funds in same period in 2007, according to Thomson Reuters and the National Venture Capital Association. Meanwhile, the dollar value raised remained virtually unchanged.

The ratio of follow-on to new funds was approximately 10-to-1 in the first quarter of 2008, compared to less than 3-to-1 in the first quarter of 2007. Five new funds and 52 follow-on funds were raised in the first quarter.

The largest funds raised in the first quarter were Essex Woodlands Health Ventures Fund VIII (balanced stage vehicle with $734 million), Clarus Life sciences II (balanced stage; $660 million) and Canaan VIII (balanced stage; $650 million).

Meanwhile, first up in Q2 is U.S. Venture Partners, which is in the midst of raising its 10th fund with a $600 million target. That’s the same amount it raised for its ninth fund in 2004. Only difference this time around might be some streamlining of upper firm management.

Next up is Versant Ventures, which is just beginning to market its fourth fund with a $500 million target. The Menlo Park, Calif.-based firm raised $400 million last time around, and focuses on health care-related companies.

“The interest by venture capitalists in capital intensive industries such as life sciences and clean technologies will likely drive fund sizes upwards for the foreseeable future,” says Mark Heesen, president of the NVCA. —Alastair Goldfisher