Rosy Outlook for VC Fundraising

February 1, 2002 ( - Venture capital fundraising is stabilizing, according to data from research firm VentureOne.

The data show that fourth -quarter institutional commitments to venture investing were only down 5% to $9 billion from the previous quarter

According to the data, venture investors raised $48.2 billion during 2001 – roughly half the $90.1 billion raised the previous year. That was much more than the $32.1 billion they distributed during the year.

Figures for 2001 were bolstered by the $17.9 billion raised in the first quarter of the year. But even at the slower fundraising pace seen after that, venture investors raised significantly more than the $32.1 billion reported in 2001.

Another sign that the venture capital industry is improving, the median pre-money valuations of second and later-round companies actually rose in the fourth quarter of 2001. The change was particularly noticeable in later rounds, which jumped from a median of $30 million in the third quarter to $42.5 million in the fourth quarter.

Valuations fell sharply in the IT and products and services sectors, but healthcare valuations were relatively resilient, dipping to a median of $17 million in 2001 from $18.8 million in the previous year. Within healthcare, the medical devices sector actually saw an increase in valuations for 2001, with the median climbing to $19.6 million from $17.2 million in 2000.

See also VC Industry Beset By Woes