Venture Fund-Raising Falls to Six-Year Low

U.S. venture capitalists, saddled with new funds they haven’t invested, slowed fund-raising to a six-year low in the first quarter, according to Venture Economics and the National Venture Capital Assn.

A total of 44 funds received $2.2 billion in commitments last quarter, down 87% from $16.5 billion a year earlier, according to a joint study.

It marked the seventh consecutive quarterly decline from a peak of $30.3 billion in 2000’s second quarter and the least since the third quarter of 1996, when the industry raised $1.3 billion.

Venture capital firms haven’t been able to sell investments and distribute proceeds to the investors who supply capital because of slumping stock markets and decreased demand for initial share offerings.

That’s making investors, many of whom reached their allocation limits to private equity, hesitant to commit to new funds.

The shrinking appetite for money follows several years in which venture firms raised record amounts.

Some firms even gave back a portion of the commitments they got because they couldn’t invest the money fast enough.

The slowing investment pace drew complaints from investors that firms weren’t earning their management fees.