US startup funding jumped 10% to $21b in 2012

US venture capital firms raised $20.6 billion from 182 funds in 2012, according to Thomson Reuters and the National Venture Capital Association (NVCA).

The numbers mean a 10% increase in amount by dollar commitments compared to 2011, and a 3% decline by number of funds.

“The venture capital fundraising environment has settled into a ‘new normal,’ characterized by a barbell structure of larger funds which are stage and industry agnostic on one end, and smaller, early stage, industry or region specific funds on the other,” said Mark Heesen, president of NVCA.

“It is on these two ends of the spectrum where capital is concentrating and successful firms are raising follow-on funds,” said Heesen. “Simultaneously, new funds continue to enter the asset class, almost exclusively at the smaller end of the spectrum.”

Heesen said that this structure, coupled with increasingly discerning limited partners, has kept the overall size of the venture industry below $25 billion each year since 2009, a size that many believe to be optimal for successful investing and maximizing returns.

In the fourth quarter alone, 42 US venture capital funds raised $3.3 billion. This level marks a 35% decrease by dollar commitments and a 25% decrease by number of funds compared to the preceding quarter.

In the October-December period, the top five venture capital funds accounted for 55% of total fundraising, on par with the third quarter of 2012.

Sequoia Capital Global Growth Fund led fourth-quarter venture capital fundraising with $700 million. Running up was Venture Lending & Leasing VII with $373.1 million.

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