U.S. VC Fundraising Dominated by Mega-, Micro-Funds
July 31, 2014
The VC fundraising landscape is seeing more mega-funds and micro-funds, according to PitchBook's 2H 2014 U.S. Fundraising and Capital Overhang Report. Six funds each totaling more than $1 billion in commitments closed in 1H 2014, which puts this year off to a strong start in terms of capital raised. At the same time, the market is welcoming a larger proportion of micro-funds, defined as $50 million or less of capital raised. In the first half of this year, more than 60% of all closed VC funds fell into that category, the highest percentage in a decade.
The U.S. VC capital overhang continues to shrink, now down to about $58 billion. Much of the dry powder in the industry is locked up in mid-sized fund buckets (almost 50% in funds between $100 million and $500 million in size). That will likely change by the end of 2014, as the six new mega-funds will mean the overhang will be substantially more top-heavy.
Highlights from this report include:
• 84% of all VC funds reached their targets in 1H 2014
• Large VC funds ($1 billion+) made up almost half of all capital raised through the first two quarters of 2014
• The median VC fund size hit a decade low in 1H 2014