Venture Capitalists' Coffers Grew in '04
BY Darren Dahl
Feb. 3, 2005 -- Better than expected fourth quarter results have helped venture capital firms stoke their fundraising furnaces for the third year in a row, according to a new study by Thomson Venture Economics and the National Venture Capital Association. In fact, the $17.6 billion that 170 funds raised last year was an impressive $3.4 billion more than the total funds raised over the last two years combined.
Even more outstanding results were reported in the buyout and mezzanine fund arena: the $45.8 billion raised by 103 funds marks the highest level of private equity commitments since the year 2000. A reported 34 funds raised over $13 billion in the fourth quarter alone.
The news gives further hope to an industry still struggling to recover from its pre-crash high-water mark in 2000 where a total of almost 800 VC, buyout and mezzanine funds raised over $180 billion to help feed the dot-com economy.
"We expect the quarterly increases in venture capital commitments to continue into the first half of 2005," said Mark Heeson, president of the NVCA. "Many established firms are still out there fundraising successfully. But as an asset class, we should be looking for an eventual leveling off this year so that we do not raise more money than the industry can support."
One hungry area that the industry has retrained its fundraising strength on is emerging companies, where VCs poured $21 billion in 2004. That figure marks the first increase in new company funding on over three years, according to the MoneyTree survey published jointly by Thomson, the NVCA and PricewaterhouseCoopers.
DARREN DAHL is a contributing editor at Inc. Magazine, which he has written for since 2004. He also works as a collaborative writer and editor and has partnered with several high-profile authors. Dahl lives in Asheville, NC.