Private equity fund-raising plunges in fourth quarter; VC plummets in'‘08

Research Triangle Park, N.C. — Private equity, including venture capital, fund-raising plunged in the fourth quarter of 2008 as the effects of the Wall Street meltdown and global recession spread across the financial sector.

Venture capitalists raised $24.7billion, a sharp 25 percent drop from the $33.1 billion raised in 2007. The 2008 total is the lowest for VCs since 2004.

A total of 99 funds raised some $43 billion in the final three months of the year. That total was less than half the $100 million raised by 208 funds in the same time period for 2007, according to Dow Jones Private Equity Analyst.

The sharp drop ensured that private equity funds didn’t break the record of $325.8 billion raised in all of 2007. For 2008, the total reached $265.6 billion.

Although still the second best year on record, Jennifer Rossa, managing editor of Dow Jones Private Equity Analyst, said the fourth-quarter slide could be signs of worse news to come.

"While 2008 was still easily the second-best year on record, the decline we saw in the most recent quarter may steepen in the coming months, as some large buyout shops are considering fund size cuts and many limited partners are going to have trouble finding money to commit," Rossa said.

Buyout funds dropped 26 percent in 2008 from 2007 to $244.6 billion.