U.S. venture capital firms raised $8.9 billion in new commitments from 58 funds during the first quarter of 2014, an increase of 81 percent compared to the level of dollar commitments raised during the fourth quarter of 2013 and a nine percent increase by number of funds, according to Thomson Reuters and the National Venture Capital Association (NVCA). The level of dollar commitments during the first quarter of 2014 more than doubled the comparable period in 2013 and marks the strongest quarter for venture capital fundraising, by dollars, since the fourth quarter of 2007 when $10.4 billion was raised for venture capital investments.
“With the exception of some established firms, fundraising for most venture capital firms has been difficult in recent quarters due to a shaky exit market,” said Bobby Franklin, President and CEO of NVCA. “Recently, however, we’ve been experiencing an uptick in IPO activity as well as momentum in the M&A market, enabling venture capital firms to distribute proceeds to their investors and begin the process of raising money for the next crop of American businesses. While conditions are certainly better, the fundraising environment for many of our members continues to be very difficult.”
Commitments were received by 33 follow-on funds and 25 new funds during the first quarter of 2014 with 92% of new capital committed going to follow-on funds. The number of new funds raised during the first quarter marks a 47 percent increase from the number of first- time funds raised during the fourth quarter of last year and registers as the strongest quarter for new funds since the fourth quarter of 2000 when 37 funds raised $2.6 billion.
The largest new fund reporting commitments during the first quarter of 2014 was from Palo Alto, California-based WiL Fund I, L.P. which raised $243.0 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.
First quarter 2014 commitments were led by Palo Alto-based TCV VIII, L.P. which raised $1.38 billion, and San Francisco-based Founders Fund V, L.P. which raised $1.01 billion. The five largest venture capital funds raised during the first quarter of 2014 accounted for 60 percent of new commitments during the quarter.