The Nationwide Venture Capital Slowdown Continues

Venture capital had another rough year in 2010, as industry fundraising shrank 14 percent to $11.6 billion, compared with 13.5 billion in 2009 and $40 billion in 2007, according to Dow Jones (via TechCrunch). The broader private equity industry also had a tough year, raising 16 percent less than in 2009.

Says Dow Jones:

Multi-stage funds accounted for the majority of venture funds raised, as 38 funds collected $5.4 billion, down 26% from last year. It has become apparent that LPs are growing more selective, both with the funds they invest in and the amount of capital they invest in the asset class. In response, many firms are downsizing their funds. For example, Menlo Ventures closed on $400 million for its eleventh fund, one-third the size of its 2005-vintage predecessor.

How can the overall picture be so gloomy when by some accounts the fast-growing New York tech scene could be on the verge of a bubble? As we saw a few days ago, New York only accounts for a small portion of U.S. venture funding, so presumably it’s not a big enough piece of the national pie yet to lift the broader market.  

In any case, here’s an illuminating chart.

us venture capital funds 2010 The Nationwide Venture Capital Slowdown Continues

mtaylor [at] observer.com | @mbrookstaylor

Comments

  1. Eugene Gordon says:

    Venture Capitalists don’t venture. They haven’t for a long time. In a sense they are indistinguishable from investment bankers. No loss for early phase startup companies. The real loss for the country is the angel investors who have lost their halo.