VC Fundraising Q3 2007

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VC Fundraising Q3 2007

  1. 1. Emily Mendell, NVCA, 610-565-3904, emendell@nvca.org Matthew Toole, Thomson Financial, 646-822-7560, matthew.toole@thomson.com Sandy Anglin, Thomson Financial, 646-822-7334, sandy.anglin@thomson.com VENTURE CAPITAL FUNDRAISING ACTIVITY SLOWS IN 3Q 2007 Number of Firms Raising Money at Lowest Level Since 2001; Most Funds Raised in Quarter Were Early Stage New York, October 15, 2007 – Fifty-nine venture capital firms raised $6.0 billion dollars in the third quarter of 2007 according to Thomson Financial and the National Venture Capital Association (NVCA). This quarter’s figures represented a decline in the number of funds and dollars raised from the second quarter of 2007 when 83 funds raised $9.0 billion. In the first three quarters of 2007, venture capital firms raised $20.7 billion or approximately 79 percent of the volume raised in the same period of 2006. Fundraising by Venture Funds, 2002-3Q 2007* Venture Capital Number of Venture Year/Quarter Funds Capital ($M) 2002 175 3,774.0 2003 151 10,640.9 2004 207 19,023.4 2005 227 28,284.0 2006 229 31,693.6 2007 YTD 182 20,669.0 3Q'05 63 5,563.5 4Q'05 85 9,347.8 1Q'06 76 6,667.5 2Q'06 75 14,120.5 3Q'06 68 5,484.7 4Q'06 66 5,420.9 1Q'07 78 5,718.3 2Q'07 83 8,956.4 3Q'07 59 5,994.3 Source: Thomson Venture Economics & National Venture Capital Association *These figures take into account the subtractive effect of downsized funds “We expect the number of venture capital firms raising funds to remain very stable and perhaps even decline during the next year as these venture capitalists focus on deploying the dollars that have recently been raised,” said Mark Heesen, president of the NVCA. “The high percentage of early and balanced stage funds raised suggests a continued venture capital focus on growing young, start-up companies from the ground up.”
  2. 2. In the third quarter, twenty-six early stage focused funds raised $903.3 million, sixteen balanced stage focused funds raised $3350.7 million, and nine expansion stage focused funds raised $613.2 million. The largest funds raised in the early, balanced, and later stages were Technology Partners Fund VII, LP ($300 million), Battery Ventures VIII, LP ($750 million), and New River Management V, LP ($250 million), respectively. VC Funds: New vs. Follow-On No. of No. of Follow- on Total New 2002 58 117 175 2003 50 101 151 2004 56 151 207 2005 57 170 227 2006 49 180 229 2007 YTD 40 142 182 3Q'05 12 51 63 4Q'05 26 59 85 1Q'06 20 56 76 2Q'06 13 62 75 3Q'06 14 54 68 4Q'06 15 51 66 1Q'07 20 58 78 2Q'07 16 67 83 3Q'07 8 51 59 Source: Thomson Venture Economics & National Venture Capital Association While the spread between follow-on funds and first-time funds decreased in the third quarter, the ratio of follow-on to new offerings exceeded 6 to 1. Only eight new funds were raised in the quarter, compared to fifty-one follow-on entities. This represents the smallest number of new funds raised since the second quarter of 1995; however, the total funds raised by new funds totaled $553.7 million, exceeding the dollar volume in five of the last twelve quarters. The largest fund raised in the quarter was the Battery Ventures VIII, LP fund at $750 million followed by the Bessemer Venture Partners VII, LP fund and the MDV IX, LP fund at $625 million and $580 million dollar raised, respectively, in the third quarter. Note: Beginning in the first quarter of 2007, buyout and mezzanine fundraising will be distributed in a separate release prepared by Thomson Financial. Thomson Financial, with 2006 revenues of US$2 billion, is a provider of information and technology solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation (www.thomson.com), a global leader in providing essential electronic workflow solutions to business and professional customers. With operational headquarters in Stamford, Conn., Thomson provides value-added information, software tools and applications to professionals in the fields of law, tax, accounting, financial services, scientific research and healthcare. The Corporation's common shares are listed on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC). The National Venture Capital Association (NVCA) represents approximately 480 venture capital and private equity firms. NVCA's mission is to foster greater understanding of the importance of venture capital
  3. 3. to the U.S. economy, and support entrepreneurial activity and innovation. According to a 2006 Global Insight study, venture-backed companies accounted for 10 million jobs and $2.1 trillion in revenue in the United States in 2005. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit www.nvca.org.

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