It’s Official: Fund-Raising Sucked Last Year

If you didn’t manage to raise a new fund last year, join the club.

The National Venture Capital Association and Thomson Reuters (publisher of VCJ) released figures last month showing that 2009 was the lousiest fund-raising year since 1993 (in terms of number of funds raised) and 2003 (in terms of dollars raised).

(Note: See RELATED TABLE DATA on right side of this page for tables on quarterly and annual fund-raising and all funds raised in Q4 2009.-Ed.)

U.S.-based venture firms raised $15.2 billion for 120 funds last year, down from $28.5 billion for 223 funds in 2008.

In the fourth quarter, U.S.-based venture firms raised $3.8 billion for 32 funds, compared to $3.6 billion for 48 funds in the fourth quarter of 2008, and $2.1 billion for 25 funds in the third quarter of last year.

Despite the poor showing last year, NVCA President Marc Heesen predicts that 2010 will be competitive since a number of firms that were scheduled to raise funds in 2009 pressed pause in the hopes of a rosier economy this year.

“Many venture firms voluntarily stayed out of the fund-raising market in 2009, a dynamic that clearly is reflected in the lower volumes,” Heesen said in a prepared statement. “However, most of these firms will not be afforded the luxury of continuing to wait for market conditions to improve in 2010. They will be out in the market raising funds alongside firms that were already scheduled to raise this year.”

In addition, a mere 26 first-time funds managed to close last year. That’s about one-third the number of first-time funds that have closed in each of the previous four years.

The largest new fund of 2009 belongs to Andreessen Horowitz, which brought in $300 million to invest in seed stage deals. The firm is headed by Marc Andreessen, co-founder of Internet browser developer Netscape Communications Corp., and Ben Horowitz, Andreessen’s longtime investing partner.

The largest fund raised in 2009 was the 13th fund of New Enterprise Associates, which closed on $2.5 billion, the same amount it raised for its previous fund in 2006.

Norwest Venture Partners, whose sole LP is Wells Fargo, raised the largest VC fund of the fourth quarter, closing on $1.2 billion. —Constance Loizos and Alastair Goldfisher