InterWest News
Fundraising falls to 0 in state National numbers drop 45% in first quarter as the fewest funds since 2003 are active
Dallas Morning News
Sheryl Jean
14 April 2009
Venture capital fundraising fell 45 percent in the first quarter from a year earlier, hitting zero in Texas, according to data released Monday by the National Venture Capital Association and Thomson Reuters.
Forty U.S. funds raised $4.3 billion in the quarter, the fewest number of funds since the third quarter of 2003. The amount raised was slightly higher than the previous quarter's $3.5 billion but far less than the $7.9 billion raised in the first quarter of 2008.
August Capital Management in Menlo Park, Calif., raised the largest fund in the first quarter: $650 million.
NVCA president Mark Heesen said most venture firms are not actively fund- raising because they recently raised a fund or are waiting for market conditions to improve. But some firms with solid track records continue to raise money during the recession.
In Texas, two firms are investing from funds closed last year. Austin Ventures is investing a $900 million fund and InterWest Partners has $650 million to invest.
"We're certainly glad we did it then, and there's no question it was easier to do last year, especially in the summer, than it is now," said Barry Cash, an InterWest partner in Dallas.
The firm's diversification - offices in Dallas and Menlo Park and investments roughly split between information technology and life sciences - helped fundraising efforts, he said.
Another firm, Richardson-based StarTech Early Ventures, has gone into semi-hibernation after failing to raise a new investment fund last year.
StarTech founder Matt Blanton said it could take awhile for venture firms to thrive again. "We don't see a lot of vigor in the economy until sometime in 2010," he said. "I hope it's wrong. I hope it's faster."
On Friday, the NVCA, Thomson Reuters and PricewaterhouseCoopers plan to release first-quarter venture capital investment figures.
The NVCA expects investments to be on par with or less than the previous quarter based on economic and market uncertainty, said spokeswoman Emily Mendell. For the fourth quarter of 2008, U.S. venture firms invested $5.4 billion in 818 young companies, including $326.2 million in 29 companies in Texas.
Staff writer Victor Godinez contributed to this report.
