Update: The NVCA has just put out the Q1 venture capital investment numbers — $3 billion across 549 deals. This represents a 47% decline from the $5.7 billion invested in Q4 2008 across 866 deals. The decline this quarter is even more worrying when compared to Q1 2008 when venture capitalists invested $7.8 billion – which is a drop of 61.5% — GigaOm post. Also read the NVCA’s analysis of early stage investments by sector and stage during the quarter in the release release.
Fundraising in the US venture capital market has been slow, sometimes non-existent, for some time now and it isn’t getting better just yet. The Q1 2009 numbers released by the National Venture Capital Association (NVCA) report that 40 venture capital funds raised $4.3 billion, down almost 40% from 7.1 billion raised by 71 funds in Q1 2009 – see details in the release here. Only three out of the 40 that raised capital are new funds. There is however one small positive. Fundraising in Q1 2009 has been slightly higher than Q4 2008. Still, it is going to be hard for startups to come by money for a while longer, both in the US and in India, which depends quite heavily on the US venture capital industry for fund inflows.
Not surprisingly, it is not looking good on the exits front either. Q1 2009 saw M&A-led (merger and acquisition) exits worth $654.3 million against $4.54 billion in Q1 2008, reports an April 1 NVCA release. There were no IPO-led exits. Another worrying aspect is that exit deals that earned venture capitalists a 4x return (four times the original investment), which the NVCA terms a top return, accounted for just 23% of total exits in Q1 2009 against 46% in Q1 2008.
