Venture-capital fundraising plunges 35% in first quarter

By Tiffany Hsu

April 9, 2012 12:36 PM PT

Venture-capital fundraising in the U.S. plummeted 35% in the first quarter of 2012 – but the industry is hoping investors are just taking a breather before they begin pledging more funds in earnest.

The total pot at the end of the quarter was $4.9 billion raised by 42 separate funds, including ones from Canaan Partners and Bain Capital Ventures. That’s 9% fewer participating funds than the same quarter a year earlier, which raised $7.6 billion.

The new data from the National Venture Capital Assn. and Thomson Reuters shows five funds raising 75% of the cash, with Menlo Park-based Andreessen Horowitz laying claim to $1.5 billion.

But the outlook isn’t too gloomy. The $4.9 billion raised is still the third highest amount raised since the end of the recession.

And more venture-backed companies are going public (see LinkedIn, Groupon and Yelp) and more funds are expected to start raising money this year, according to Mark Heesen, president of the venture capital group.

The association last week found that California is a runaway leader in landing venture capital investment.

“Venture firms appear to be more optimistic about the fundraising environment,” he said.

California is by far the leading state in luring venture capital

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