DOWNLOAD: Woes continue for fundraisers in H1

Venture funds worldwide raised a combined $58.1bn in the first half of 2023, down from about $100bn in the first half of last year, according to exclusive Venture Capital Journal research.

After a dismal Q1, fundraising woes continued in the second quarter. Venture funds worldwide raised a combined $58.1 billion in the first half of this year, down from about $100 billion each in the first halves of 2022 and 2021. In one bright spot, VCs raised a bit more in Q2 than they did in the previous quarter – $31.4 billion versus $26.7 billion.

While the number of funds that were closed in Q2 improved from Q1 – 167 versus 88 – the overall total is still far off the pace seen in the prior two years. This year is now on pace to hit about 500 closed funds, down from 846 funds closed in 2022 and an all-time high of 1,322 closed funds in 2021.

Average fund size hits new record

With fewer funds getting raised – and successful firms raising increasingly larger funds – the average fund size continues to grow. It hit a record high of $227.8 million in the first half of this year, up from $212.3 million in 2022 and $143.5 million in 2021. There were seven funds that closed on $1 billion or more in H1. As a group, they raised $13.2 billion, or 23 percent of the H1 total.

Asia continues to falter

North America remained the favorite region for newly closed funds in the first half of this year. Of the 58.1 billion raised, 47 percent is targeted for investment in North America, roughly the same percentage as 2022. Funds with a multi-regional focus were the second most popular, accounting for 34 percent of the total, up from 31 percent in 2022. Interest in Europe grew slightly, with Europe-focused funds going from 6 percent of the total in 2022 to 8 percent in H1. With a growing number of investors showing an aversion to China, funds targeting Asia-Pacific experienced a decrease from 14 percent of the total last year to just 10 percent in H1. The Asia-Pacific figure is the lowest it has been since we started tracking global VC fundraising in 2008.

GPs hold out hope for Asia funds

Despite the poor fundraising result for H1, funds in market remain ambitious. As a group, they are seeking $272 billion. Although funds targeting Asia-Pacific only managed to raise 10 percent of the total in H1, those that are currently in market are seeking close to $60 billion, or 22 percent of the total for funds in market. The largest AP-focused fund in market is from Peak XV Partners (formerly Sequoia India/SEA), which is seeking $2.8 billion for Sequoia South East Asia and India Fund. Funds targeting North America account for the largest chunk (43 percent), followed by multi-regional funds (26 percent), Asia-Pacific, Europe (7 percent) and Latin America and MENA (1 percent each).

NEA leads the pack

As was the case in Q1, New Enterprise Associates held onto the title for biggest fundraiser in H1. It closed on $3.2 billion for NEA 18 Venture Growth Equity, which has a multi-regional focus, and $3 billion for its flagship New Enterprise Associates 18, which also has a multi-regional focus. The third largest fundraiser was B Capital Group, which closed on $2.1 billion for B Capital Global Growth III. Rounding out the top five were Bain Capital, which raised $1.4 billion for Bain Capital Venture Fund 2022, and Insight Partners, which collected 1.3 billion for Insight Partners Continuation Fund II.

To download a PDF of the report, click here; for the data, click here.