Fundraising by U.S. venture firms drops 54 percent

SAN FRANCISCO, July 9 Tue Jul 9, 2013 2:42pm EDT

SAN FRANCISCO, July 9 (Reuters) - Fundraising by U.S. venture-capital firms dropped 54 percent in dollar terms to $2.88 billion in the second quarter, the weakest quarter for fundraising in almost two years.

Some 44 firms raised the cash, the National Venture Capital Association and Thomson Reuters said, compared to 51 a year earlier.

Returns for venture capital generally have been underperforming compared to the stock market. For the 10-year period ended Dec. 31, the latest available, venture capital returned 6.9 percent, compared to 8.5 percent for the Nasdaq composite index, according to consultancy Cambridge Associates.

"Many long-standing, pedigree venture firms are heeding the guidance from limited partners and raising smaller, more agile funds," said Mark Heesen, president of the NVCA, in a press release. "Counterbalancing this trend is the recent uptick in the venture-backed IPO market which, if sustainable, may very well draw more dollars into the asset class in the coming year."

While more venture-backed companies held initial public offerings last quarter than any quarter since 2007, they were for relatively modest amounts, averaging $102.6 million.

Massachusetts-based Matrix Partners, an investor in online retailer JustFab and an early investor in Apple, raised the largest new fund of the quarter, at $450 million. Scale Venture Partners followed with a $300 million fund, and Foundation Capital raised a $282 million fund.

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