We’ve seen a flurry of activity in recent weeks among Seattle area venture capital firms, led by Madrona Venture Group which raised $300 million last month and Divergent Ventures which pulled in $6.9 million of what partners hope will be a much larger fund. Meanwhile, SEC filings indicate that Frazier Healthcare and Voyager Capital — both of Seattle — are on the prowl for more money.
It appears to be a good time to look. A report out today from Dow Jones indicates that 82 venture capital funds raised $13 billion during the first six months of the year, an increase of 31 percent over the same period last year.
“Despite the industry’s lackluster returns in recent years, there’s still lots of interest in funds that have good track records or are well-situated to take advantage of broad consumer technology trends,” said Zoran Basich, editor of Dow Jones VentureWire. “We’re seeing that reflected in the healthy fund-raising numbers.”
Interestingly, the money is not just going to the big dogs, those funds which raise $1 billion or more. According to the Dow Jones research, 43 early-stage funds raised $3.1 billion during the first half of the year, up from $1.3 billion for the same period last year.
Madrona’s new $300 million fund — while the largest in the firm’s history — certainly qualifies in the early-stage group. In fact, interest was so high in Madrona’s latest fund that the backer of companies such as Farecast, Isilon and Amazon.com had to place a limit on how much money it wanted to raise.
One of Madrona’s investors also happened to be the Kauffman Foundation, which earlier this year released a blistering report about the performance of venture capital funds over the years. It found that sixty-two out of 100 venture funds it worked with failed to exceed returns available from the public markets, after fees and carry were paid.