Venture firms raised capital at a healthy pace in the second quarter, despite turbulence in the broader economy, with fund-raising boosted by limited partner demand for growth and later stage vehicles.
In all, 59 North American firms closed 63 funds totaling $9 billion in the second quarter, based on preliminary data from Thomson Reuters, publisher of PE Week. (Thomson Reuters and the National Venture Capital Association are expected to release a more definitive Q2 fund-raising report later this month.)
Fund-raising levels were up in comparison with Q1, in which 57 venture funds raised $6.3 billion. The Q2 numbers also marked an increase from the second quarter of 2007, during which 67 funds raised about $6.7 billion.
Kelly DePonte, partner at San Francisco-based placement agency
“The climate is getting rougher, and a lot of that is being driven by the public stock market,” he says. “As their overall portfolio values fall, people are feeling a lot more squeezed.”
Clean technology funds continued to draw commitments in the second quarter. Boston-based
Foundation, which closed a $750 million sixth fund in April, announced that it will allocate roughly $250 million of that total to expanding the firm’s 5-year-old cleantech practice. And in May, Kleiner Perkins launched a $500 million Green Growth Fund, which will focus on scaling cleantech businesses.
A number of early stage funds also held closings last quarter. Lightspeed, which closed an $800 million fund in May, said will continue to focus on seed and early stage startups, especially in the United States and Israel.
Other early stage funds that raised capital in Q2 include
But don’t expect the early stage to be dominating the fund-raising environment in the future, says DePonte, who notes: “The venture market is becoming on an overall basis, a lot later.”