VC Funds Having Little Financial Luck
Institutional investors seem to be playing it very, very safe. A new report from the National Venture Capital Association (NVCA) and Thomson Reuters indicates that venture capital funds weren’t able to raise much money in the first quarter of 2009, and new funds had almost no luck.
Just three new funds were able to attract cash in the first quarter of 2009. In comparison, a full 10 funds received capital during the same period last year, and 21 made the list in the first quarter of 2007.
As for how the situation looks on a larger scale, an NVCA and Thomson Reuters release stated, "Just 40 venture capital funds raised $4.3 billion in the first quarter of 2009 . . . . This level represented the smallest number of venture funds raising money in a single quarter since the third quarter of 2003."
The $4.3 billion dollar value wasn’t great, either, as more impressive sums were raised in seven of the eight previous quarters.
Companies should still plan on just looking out for themselves, then, and not count on any venture capital funds to come to the rescue. Hopefully we won’t see too many innovative businesses wither as a result.