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October 07, 2013

Venture Capital Funds Raised $4.1 Billion During Third Quarter 2013

Experienced Funds Dominate the Fundraising Scene

NEW YORK - U.S. venture capital firms raised $4.1 billion from 56 funds during the third quarter of 2013, an increase of 28 percent compared to the level of dollar commitments raised during Q2 2013, and a 14 percent increase by number of funds, according to Thomson Reuters and the National Venture Capital Association (NVCA). Dollar commitments raised during the first three quarters of 2013 are down 29 percent from those raised in the same period last year. By number of funds, the third quarter of 2013 ranks as the strongest quarter for venture capital fundraising in 12 months. This quarter the top five venture capital funds accounted for 58 percent of total dollars raised.

Year/Quarter

Number of Funds

Venture Capital ($M)

2009

159

16,122.0

2010

176

13,427.3

2011

186

18,981.3

2012

202

19,719.7

2013

144

11,635.5

3Q'11

66

2,116.0

4Q'11

53

6,105.0

1Q'12

61

4,812.3

2Q'12

51

6,319.3

3Q'12

60

5,233.9

4Q'12

47

3,354.2

1Q'13

45

4,273.5

2Q'13

49

3,231.9

3Q'13

56

4,129.8

Source: Thomson Reuters and National Venture Capital Association


“The slightly larger number of firms raising money in Q3 is an indication that there’s some improvement in distributions and prospects. The gradually improving IPO market, along with better quality exits on the M&A side, are signaling to limited partners that venture funds can still yield attractive returns,” said John Taylor, NVCA head of research. “Smaller fund sizes are not surprising as venture capitalists are looking to invest in less capital intensive sectors and are focused on deploying capital more efficiently.”

There were 40 follow-on funds and 16 new funds raised during the third quarter of 2013, a 2.5-to-1 ratio of follow-on to new funds. The number of new funds raised during the third quarter marks a slight decrease from the number of first-time funds raised during the second quarter of this year. By dollars raised, follow-on funds account for 89 percent of total dollar commitments during the third quarter of 2013. Over the past five years, follow-on fund dollars have accounted for 91 percent of total venture capital fundraising.

The largest new fund reporting commitments during the third quarter of 2013 was from Columbus, Ohio-based Drive Capital Fund I, L.P., which raised $181.0 million for the firm’s inaugural fund. A “new” fund is defined as the first fund at a newly established firm, although the general partners of that firm may have previous experience investing in venture capital.
 

 

No. of New

No. of Follow-on

Total

2009

39

120

159

2010

57

119

176

2011

57

129

186

2012

66

136

202

2013

41

103

144

3Q'11

20

46

66

4Q'11

15

38

53

1Q'12

19

42

61

2Q'12

16

35

51

3Q'12

19

41

60

4Q'12

20

27

47

1Q'13

8

37

45

2Q'13

17

32

49

3Q'13

16

40

56

Source: Thomson Reuters and National Venture Capital Association


Third quarter 2013 venture capital fundraising was lead by Massachusetts-based Greylock XIV, L.P. which raised $1.0 billion and California-based Sequoia Capital U.S. Venture Fund XIV, which raised $552.9 million. The Greylock fund is the first U.S. venture capital fund to raise over $1 billion this year.


Methodology

The Thomson Reuters/National Venture Capital Association sample includes U.S.-based venture capital funds. Classifications are based on the headquarter location of the fund, not the location of venture capital firm. The sample excludes fund of funds.

Effective November 1, 2010, Thomson Reuters venture capital fund data has been updated in order to provide more consistent and relevant categories for searching and reporting. As a result of these changes, there may be shifts in historical fundraising statistics as a result of movements of funds between primary market & nation samples and/or between fund stage categories.


Thomson Reuters

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About National Venture Capital Association

Venture capitalists are committed to funding America’s most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth. As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment. As the venture community’s preeminent trade association, NVCA serves as the definitive resource for venture capital data and unites its nearly 400 members through a full range of professional services. For more information about the NVCA, please visit www.nvca.org.