Thomson Reuters and the National Venture Capital Association have released their tallies for the first two quarters of 2011, but although the data looks weak at first blush, the numbers are a bit misleading. Results show the number of VC firms raising funds at a 16-year low, dropping 23 percent from 48 firms to 37 firms from the second quarter of 2010 to the second quarter of 2011.
However, in Q2 those 37 firms raised $2.7 billion, a 28 percent increase in dollar commitments year-over-year from Q2 2010’s $2.1 billion. What’s more, if you look at the first half of the year, 76 funds raised $10.4 billion, a whopping 70 percent increase by dollars from the first half of last year.
In other words, this indicates the same division between the have and the have-nots that Betabeat has been telling you about. “The fact that the number of firms raising money successfully remains at such low levels confirms an ongoing contraction of the venture capital industry, which will serve well those funds that can obtain commitments-but that group is becoming more and more narrow,” Mark Heesen, president of the NVCA, said in a press release today.
The positive read on this is that the “walking dead” relics of the dotcom era–surviving only from their existing portfolio–are dying out, letting the strong (and still breathing) survive. Nonetheless with so few firms reaping the deal flow, capital, and rewards, it’s worth it to wonder just what all this constriction will mean. In the second quarter of this year, for example, TechCrunch reports that Accel Partners accounted for 50 percent of the fundraising total. No wonder even reputable VCs are getting pangs of freudenschade.