Venture Fund-Raising Down 5% in Quarter

Investors committed $9 billion to venture capital funds in the fourth quarter, a 5% fall from the third quarter but a level that suggests fund-raising could rebound after plunging last year, according to a survey released Friday.

For all 2001, venture firms raised $48.2 billion, a 46.5% drop from $90.1 billion raised during a record 2000, according to research firm VentureOne Corp.

Fund-raising tumbled last year as investors backed away from risky privately held companies as the Internet boom driven by start-ups went bust.

Investors also retreated as markets for mergers, acquisitions and initial public offerings, each needed for returns on early stakes in start-ups, went sour with the broad stock market.

The outlook for those markets remains wobbly and may further restrain investors from committing money to venture funds, said Curtis Feeny of Voyager Capital.

“There just are not enough exits,” Feeny said.

The fourth quarter’s 5% drop in fund-raising, however, was the smallest fall between quarters last year and suggests venture fund-raising is stabilizing, according to VentureOne.

The firm also noted that the $48.2 billion raised last year was only 5% below the $50.5 billion raised in 1999 ahead of the hey-day of venture investing in Internet start-ups.