Q3 Turns Up Dismal Fund-Raising Results

The venture capital market’s fund-raising rebound landed with a thud last quarter, according to new data being released today by Venture Economics (publisher of PE Week) and the National Venture Capital Association. In all, just 34 VC firms raised a gross total of $1.68 billion during Q3, which represented a 19% drop from the previous quarter.

The only increase seen between July and September was in net fund-raising totals, which factor in capital removed from the market due to fund size cuts. During Q2, so much capital was returned ($2.73 billion by seven firms), that the quarter’s net take actually veered into negative territory. In Q3, the net total was over 340% higher than in Q2 as only one firm – BRM Capital – reduced its fund size.

One of the quarter’s biggest winners was Boston-based Schroder Ventures Life Sciences, which held a $150 million second close on its new $400 million fund. The vehicle, named Schroder Ventures International Life Sciences III, expects to invest in biotech and health-related companies over all stages of their life cycles. Since raising its first fund in 1994, Schroder Life Sciences has invested approximately 22% of its capital in early-stage companies, a little over 9% in buyouts and acquisitions, while the rest has fallen somewhere in between.

“It’s tough [raising a fund] right now, because the regular sources of capital have a lot of pressures being put on them irrespective of what’s happening in the private equity market,” says James Garvey, managing general partner with Schroder. “One of the things that I think has helped us, though, is that people are still interested in health care-focused funds.”

Other firms managing to raise over $100 million were Adams Street Partners with the first $148.5 million of the $300 million-targeted Adams Street V LP, and Sofinnova Ventures, which added another $110 million to its $250 million-targeted Sofinnova Venture Partners VI LP.

Other firms raising at least $50 million in Q3 included: Labrador Ventures ($90 million), Edison Venture Fund ($65.8 million), Walker Investment Fund ($66.5 million) and Venture Capital Fund of New England ($50.1 million).

Final numbers were still being crunched at press time, so check out www.pewnews.com on Monday for information on new funds vs. follow-on funds, what types of institutions gave the most capital and a list of the Top 10 Q3 fund-raisers.

Contact Dan Primack

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