This analyst note focuses on the recent increase in first-time venture fundraising, exploring the implications as well as the drivers of the resurgence.
• First-time venture capital funds raised $5.9 billion across 59 new vehicles globally in 2017. While nowhere near the highs of the dot-com boom, this represents a 21% increase in capital raised and 37% increase in the number of first-time funds from 2016 totals. 2017 was also the fourth consecutive year of growth in limited partner commitments to first-time managers.
First-time VC investment teams whose members have experience both founding companies and working at VC/growth equity firms go on to raise a follow-on fund 66% of the time—more often than investment teams with less experience.
Recent first-time VC investment teams are more experienced than they have been historically. Until 2010, at least 50% of first-time VC investment teams had neither VC/growth equity experience, nor founded a company. By 2013, the proportion of first-time managers without this experience had shrunk to just 27% and subsequently has hovered between 26% and 41%.