US venture firms raised $20.6 billion last year, a 10 percent increase over 2011, according to data from Thompson Reuters and the National Venture Capitalist Association.
This marks the largest capital raised by US VCs since 2008, where 215 funds raised $25.6 billion. The number of funds that raised money in 2012 was 182 at a 3 percent decrease in funds over the previous year.
Venture-backed IPOs raised $21.5 billion from 49 listings, marking the strongest IPO year since 2000 in terms of capital raised. Obviously, investors have Facebook to thank.
In the most recent quarter, 55 percent of the total fundraising was done by the top five VC firms, as was the case in the previous quarter.
The number of IPOs began to siphon off with a slight decline in the final quarter of 2012 over the third quarter, though the amount of dollars raised increased, with eight offerings raising $1.4 billion. Seven of those companies were based in the US, and five were IT companies. The only non-US company to IPO in the fourth quarter was China-based online game community YY, Inc. The largest IPO in Q4 proved to be Workday, an HR enterprise solutions developer which $733 million and began trading on the NASDAQ on Oct. 11.
“The venture capital fundraising environment has settled into a ‘new normal’ which is characterized by a barbell structure of larger funds which are stage and industry agnostic on one end, and smaller, early stage, industry or region specific funds on the other,” said Mark Heesen, president of NVCA. “It is on these two ends of the spectrum where capital is concentrating and successful firms are raising follow-on funds. Simultaneously, new funds continue to enter the asset class, almost exclusively at the smaller end of the spectrum. This structure, coupled with increasingly discerning limited partners, has kept the overall size of the venture industry below $25 billion each year since 2009, a size that many believe to be optimal for successful investing and maximizing returns.”
The year saw 27 follow-on funds and 55 new funds raised in 2012, at a ratio of 2.3 to 1 of follow-on to new funds. The fourth quarter saw 25 follow-on funds and 17 new funds were raised, a ratio of 1.5 to 1.