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Venture Economics

and the

National Venture Capital Association

said Thursday that venture capital investment in the fourth quarter declined 33.8% from third-quarter levels due to a volatile market and increased investor focus.

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In last year's fourth quarter, 123 U.S.-based venture capital funds raised $18.2 billion, a down from $27.5 billion raised by 115 funds in the previous quarter.

The groups cited several factors for the decline. Investors now give more attention to companies already in their portfolios, leaving less time for new investments. In addition, the shaky market and sluggish economy create less need to raise capital, slowing the investment pace. Finally, first-time funds face resistance from institutional investors, who look for more experienced venture teams to invest with.

For the full year, 499 venture funds garnered a record $94.3 billion, up 57% from $60 billion in 1999.