Big Year-Over-Year Downturn in Venture Funds Raised in Q2

Venture capital fundraising was markedly down in the second quarter of 2007 compared to the same period last year, according to a report released yesterday by Dow Jones VentureOne. All told, U.S. venture firms raised just $3.23 billion in the quarter, 62 percent less than in Q2 2006. This marks the biggest year-over-year quarterly downturn since 2002.

The first half of 2007 didn’t shape up so well, either. Venture firms raised just over $6.3 billion, down 50 percent from the first half of 2006, according to the report. With the exception of the first six months of 2003, when just $3.8 billion was raised, it was also the lowest total for the first half of any year since at least 1997, which is as far as the VentureOne figures provided go back. (Note: the data had not yet been posted by VentureOne when we wrote this article, but this page has links to data and press releases, and the new information should be there soon.)

Victoria Foo, research manager for Dow Jones VentureOne, cautioned that making year-to-year comparisons was tricky. For instance, as her firm’s press release noted, a trio of mega-funds that closed in 2006 brought in more than $4.3 billion in capital, making this year look worse in comparison than would otherwise have been the case. Foo said that it was too soon to write off 2007, though she did not have a ready explanation for why the first half of this year was the second-lowest in more than a decade.

We’re working on running that down. But caution in interpreting the numbers clearly is warranted, especially in light of recently released data showing that VC investment (as opposed to fund raising) is up this year (although not in Boston). In the meantime, here is VentureOne’s list of top 10 funds closed in the second quarter. Only one is from the New England region: the Charles River Partnership XIII raised by Charles River Ventures of Waltham, MA. But down a few notches, in 14th place, is the diminutive MB Growth Partners II from MerchantBanc of Manchester, NH. It raised $12 million.

$600 million — IVP XII fund at Institutional Venture Partners in California
$600 million — Venrock Associates V fund at Venrock in New York
$285 million — Charles River Partnership XIII fund at Charles River Ventures in Massachusetts
$275 million — Vivo Ventures Fund VI at Vivo Ventures in California
$260 million — QuestMark Partners III fund at QuestMark Partners in Maryland
$258 million — Edison Venture VI fund at Edison Venture Fund in New Jersey
$200 million — Emergence Capital Partners II fund at Emergence Capital Partners in California
$190 million — PTV Sciences II fund at PTV Sciences in Texas
$175 million — AMV Partners II fund at Accuitive Medical Ventures in Georgia
$115 million — Early Stage Fund IV Limited Partnership at Venture Investors in Wisconsin

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