Venture Firms Double Fundraising

U.S. venture capital fundraising more than doubled in the first quarter while buyout pledges increased more than fourfold, as pension funds sought alternatives to stocks and bonds, according to a survey released Monday.

Venture firms raised 48 funds with commitments of $5.3 billion, compared with 49 funds and $2.6 billion a year earlier, according to a survey by New York-based Thomson Venture Economics and the National Venture Capital Assn. of Arlington, Va. Buyout funds collected $15.8 billion of pledges for 38 funds, up from $3.4 billion for 25 funds a year earlier.

Many venture firms are raising their first funds since Internet stocks collapsed in 2000. Institutional investors are increasingly buying alternative assets as the average stock and bond fund fell in the first quarter. Meanwhile, some investors have warned that larger funds may have difficulty generating profits with so much money competing for investments.

“Bigger is not better when analyzing venture capital commitment numbers,” NVCA President Mark Heesen said in a statement. “We would like to see fundraising track the $4-billion-to-$6-billion investment levels we have seen over the past 11 quarters.”

The largest venture capital funds were Weston Presidio Capital V, with $1 billion of pledges; August Capital IV, with $550 million; and Bank of America Corp.’s BAVP Fund VII and Mohr, Davidow VIII, each of which raised $400 million.

Among buyout and so-called mezzanine funds, Goldman Sachs’ Capital Partners V and affiliated funds raised $5 billion of an $8.5-billion target.