VC Fundraising in 2008: It Could Have Been Worse

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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