It’s official: Institutional investors have put the kibosh on investing in new venture capital funds, though established firms with track records have been able to scare up some money. That’s the big news out of today’s announcement about fund raising trends in the first quarter of 2009 from Thomson Reuters and the National Venture Capital Association.
In the quarter, 40 venture capital funds raised $4.3 billion, down 40% from the first quarter of 2008 when 71 funds raised $7.1 billion. It was the smallest number of venture funds to raise money since the third quarter of 2003. The biggest shocker? Of those 40 funds, only 3 of them were new funds; the other 37 were raised by existing venture firms.
The news reinforces recent reports that big investors such as university endowments, pension funds and fund of funds are pulling back from venture capital as an asset class. Such investors are reluctant to finance new funds because venture returns have been poor lately and because their investments in public equities have seen sharp drop-offs....MORE
Here's a quote via the Silicon Valley Business Journal: