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Venture Capital Funds Decline

SAN FRANCISCO -- U.S. venture capital firms raised $3.23 billion in the second quarter of 2007, a 62% drop from the same period last year and the biggest decline since 2002, according to Dow Jones VentureOne, the publisher of VentureSource. The quarter saw 15 venture capital funds raised, compared to 25 a year ago, and was the lowest quarterly fund total since the first quarter of 2003.

At the halfway mark of 2007, venture firms raised a total of $6.36 billion, down 50% from amounts raised in first half of last year. However, in 2006, five mega’ venture funds raised more than $7.92 billion in capital alone and 2005 saw $2.6 billion raised by two super-sized funds.

“Comparing 2007 to 2006 is almost unfair, as by this point last year we had already seen three ‘mega’ funds raise more than $4.3 billion in capital,” said Jessica Canning, director of global research for Dow Jones VentureOne. “Remove those funds from the equation and what we’re seeing is clear: Venture firms may be raising fewer funds than in years past but they are raising decidedly more capital, which is allowing them to extend the length of time between fund raisings.”