Study shows plunge in US venture funding

NVCA president Mark HeesenSan Francisco  - The US venture capital industry raised only 1.7 billion dollars in the second quarter of 2009, less than 30 per cent of the 4.6 billion dollars raised during the previous quarter, according to an industry report Tuesday.

In the same quarter a year ago venture capital firms raised a total of 9.3 billion dollars.

The funding figure was the lowest for more than seven years, according to the National Venture Capital Association, while the number of new funds formed, 25, was the lowest for 13 years.

The impact could be strongly felt especially in Silicon Valley, where venture funded start-up companies like Google, Yahoo, Intel and eBay traditionally grow to dominate the regional and national economy.

The drop off "is no surprise given the current environment," in which pension funds, university endowments and other wealthy institutions are reassessing their investment portfolios, said NVCA president Mark Heesen. Many of these so-called limited partners have pulled back from venture funding and shifted to more conservative investments.

Heesen said a rebound may not occur until next year, when limited partners may again look more favourably on venture investment. "We believe that many venture firms are waiting until 2010 and beyond," he said. (dpa)