The amount of investable assets available to venture capital funds has basically been a growth story since 2003. Dry powder slipped 7% in 2004 and 10% in 2008, but increased in every other year over this period.
Now, the dry powder number sits at $155 billion, according to alternative investment research firm Preqin, just off its December 2007 peak of $160 billion. The big number, however, masks a wide range of market situations for venture capital funds. Dry powder levels vary by strategy and region. To get a sense of what's going on behind the scenes, check out the five facts below about venture capital dry powder.
1. Expansion funds on the rise alone: This class was the only one to see "measured year-on-year growth," according to Preqin. From $6.7 billion in December 2003, expansion fund dry powder reached $35.2 billion this month.
2. Late stage funds hold the line: From December 2003 to October 2009, dry powder stayed in the $5.5 billion to $9 billion range, remaining "relatively consistent in comparison to general venture and expansion funds." Early stage funds were steady, as well, sticking between $30 billion and $35 billion for the same period.
3. No specific stage focus down double digits: These "generalist" funds hit a high point of $88 billion in December 2007. The financial crisis led to a 16% drop in dry powder the next year.
4. European heights: Venture funds focused on Europe reached a recent high, with $27 billion in dry powder. For North America, on the other hand, the outcome was much different. Funds focused on this continent saw dry powder fall from a December 2007 peak of $89 billion to $79 billion a year later.
5. All about returns: Through the first quarter of 2009 (the most recent data available), the venture capital sector has turned in a -17.1% return. But, it could be worse: buyout funds were off 33%.
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Reader Comments (Page 1 of 1)
10-18-2009 @ 5:03PM
AV said...
I calculated about $118 billion in dry powder earlier this summer: http://bit.ly/15TG7H. Good behind the scenes facts.