‘Do-or-die’ time for VCs as funding levels drop by 35%

A number of venture capital firms — including Seattle’s Madrona Venture Group and Voyager Capital — are looking to take advantage of the positive momentum in the economy to raise new funds.

Even so, the first quarter numbers out today from Thomson Reuters and the National Venture Capital Association indicate that not as many firms are meeting with success as last quarter or the same period last year.

According to the report, 42 U.S. venture capital funds raised $4.9 billion during the first quarter, a 35 percent decrease in dollar commitments. Meanwhile, the top 5 funds accounted for a whopping 75 percent of the dollars allocated.

“While the first quarter fundraising numbers represent a slower start than last year, venture firms appear to be more optimistic about the fundraising environment in 2012, especially those who have benefitted from the improving exit environment of late which has also been encouraging to our investors,” said Mark Heesen, president of the NVCA. “Many venture firms are either now officially in the market to raise a fund or will enter in 2012. For these firms, it will be ‘do or die’ – and the collective outcome of their fundraising efforts will lay the groundwork for the amount of venture capital available for investment in entrepreneurial companies the next decade.”