Last year, 108 venture funds raised $6.9 billion in new capital compared to 331 venture funds having raised $40.7 billion in 2001 according to Thomson Venture Economics and the National Venture Capital Association. Even more striking, in 2000, 653 funds raised a total of $106.9 billion in new capital. The fourth quarter of 2002 was particularly slow with only $1.2 billion in new capital being raised.
There are several factors that are constraining commitments to venture
capital funds. Chief among them are the recent phenomenon of large funds
returning previously committed capital back to their limited partners; the
inordinately large overhang of previously committed capital that has yet to be
invested; a lengthening of the fundraising process; lower private company
valuations and a shift in industry sectors and investment opportunities that
correspond to emerging national priorities.