Venture Fundraising Rises Slightly In 2Q As The Concentration Of Wealth Continues

Venture capital fundraising remained sluggish in the second quarter with a small handful of funds once again gathering a lion’s share of the money in a consolidating industry.

The quarter saw $5.9 billion raised by 38 U.S. based funds, according to the National Venture Capital Association and Thomson Reuters, publisher of this blog. The dollar total was a 12% increase from the first quarter.

The top five funds securing commitments from LPs accounted for nearly 80% of the cash, the study found. The top two funds alone – the $2.1 billion New Enterprise Associates 14 and the $1 billion Institutional Venture Partners XIV – were responsible for more than half, or 53%.

“As the number of venture capital firms continues to contract, we are beginning to see a clear bar bell forming with several large funds weighing in heavily on one side of the spectrum and a multitude of smaller funds on the other side,” said Mark Heesen, present of the NVCA, in a press release.

The second quarter release brought some good news about first quarter fundraising. The first quarter total was revised to $5.26 billion from the $4.88 billion reported in April. That puts the year on track to break the $22 billion mark, which would represent an increase over the $18.6 billion of 2011.

However, the culling of firms clearly appears to be taking place. The second quarter saw a 22% decline in the number of funds raising money, compared with the first quarter, and the smallest number of funds secure cash since the third quarter of 2009.

The second quarter saw 28 follow-on funds and 10 new funds get money. The largest new fund gathering commitments was Mithril of San Francisco, which collected $402 million.

Photo courtesy of Shutterstock.