Venture fundraising hits doldrums in September

Venture capital fundraising slowed considerably at the end summer with just $4.4 billion raised in the third quarter, according to Thomson Reuters and the National Venture Capital Association.

The soft quarter suggests that 2015 could end up behind 2014, when $30.9 billion was raised and fears of industry overfunding began to take shape. Through the first nine months of this year, more than $22.5 billion has been collected by U.S.-based venture firms.

Still, the year remains relatively strong. Funding through the first three quarters is ahead of all but one of the past six years.

The third quarter saw 53 funds close on capital, which is down by a third from the second quarter, according to the report. Capital raised is off 59 percent from the same quarter. It was the slowest period for fundraising since the third quarter of 2013 and the slowest period for first-time funds since the first quarter of the same year.

The largest new fund raised in the quarter was the $460 million for the inaugural Silversmith Capital Partners I from Boston-based Silversmith Capital Partners. It was one of 13 new funds raised in Q3.

The largest overall fund raised in Q3 was Deerfield Healthcare Innovations Fund at $550 million by Deerfield Management Company.

Foresite Capital Management raised $450 million and Foundry Group raised $225 million during the three-month period.

However, third quarter fundraising was particularly slow in September when only $409 million was raised. It was the lowest amount raised in a single month by U.S.-based firms since September 2014, when $709 million was raised.

The low level of fundraising in Q3 is in contrast to the previous quarter when VC fundraising jumped to an eight-year high in the second quarter as LPs showed a continued warming to the asset class.

The previous three-month period saw 73 funds raise nearly $10 billion, the most since before the financial crisis in the fourth quarter of 2007. However, several large funds drove the Q2 total. New Enterprise Associates raised $2.8 billion for its 15th fund, and Institutional Venture Partners closed on $1.4 billion in the previous quarter.

To download an Excel file: U.S.-based venture fundraising (Q3 2015)