Venture Capital: Funds Raised Down, Investments Up.

According to data released by the National Venture Capital Association and Thomson Reuters, venture funds raised just $1.6 billion in the third quarter. That’s down 82 percent from a year ago and 21 percent from last quarter. Worse, that sum was raised by just 17 funds, the fewest since the third quarter of 1994. The number of venture capital professionals went from 5,600 in 1998 to 8,900 in 2007 and slid back to 7,500 in 2008.

Nat Goldhaber, managing director at Claremont Creek Ventures in Oakland, CA says "a lot of limited partners are re-examining whether or not venture is a place they want to be because returns have been surprisingly poor for many of the funds, and liquidity is close to nonexistent."

TechCrunch has a great blog about this topic and another on the topic of how venture exits and fund raising are related (lots of great charts).

On the flip side, Dave Rosenberg's Software Interrupted column on CNET today titled VC investment momentum continues in third quarter says things are getting better for entrepreneurs. A few highlights reported by Dave Rosenberg:

- Invested dollars went up by 14 percent, with an 11 percent increase in number of deals
- September seemed to be right time to raise money with 40 percent of third-quarter deals occurring in the month
- California, and specifically the San Francisco Bay Area and Silicon Valley is the most likely location to raise money.
- Health care investing saw the most activity while green investors sat on their recycling cans

Bottom line - not a great environment if you are an entrepreneur looking to raise capital or seeking a liquidity event, especially in the human resources marketplace.

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