VC Fundraising in 2008: It Could Have Been Worse
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Mark Marich
The final figures for venture capital investing in 2008 have been released, and the news is not good, but it could have been much worse. Faced with a major economic crisis and moribund market for exits, venture capitalists and their investors may be starting to hunker down. However, VCs were still able to raise $28 billion in 2008. For the year, this total represents a 21.4 percent decrease from 2007’s volume. Not surprisingly, much of this fundraising was front-loaded in the beginning of the year. The final quarter of 2008 was especially tough, as VCs raised only $3.4 billion during this period. This total is a large drop from last year’s Q4 ($11.7 billion) and even from Q3 2008 ($8.4 billion). It’s tough to gain investors when the exit market is so weak. Recent data on venture-backed exits shows that the number of venture-backed initial public offerings hit a thirty-year low in 2008. Meanwhile, the mergers and acquisition (M&A) market has also slowed. In 2008, only 260 venture-backed M&A deals were signed, marking the first time in many years with fewer than 300 such deals.
View the latest Thomson Reuters/National Venture Capital Association statistics on the venture capital industry at nvca.org.
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