Private Equity Capital Raising Thrashed in 2009

Venture capital fund raising was down by a bit more than half, with only 120 VC funds raising $13 billion. In 2008, 204 VC funds were able to source $28.7 billion in capital. Distressed funds raised only $14.2 billion across 30 funds, last year.

The decline from 2008 was a substantial 66.9%. But, keep in mind that 2008 was a record year for this private equity category, buoyed by the subprime mortgage crisis -- which became the credit crisis, which became the global financial crisis in September of that year. The stability that financial markets found in 2009 made the sector less attractive.

Mezzanine funds took in $3.3 billion for 20 funds. This represents a precipitous drop of 92.4% from 2008, when 24 funds were able to source $43.1 billion in capital. Funds of funds struggled as well, seeing the $23 billion raised by 55 funds in 2008 fall to $8.3 billion for 37 funds in 2009 -- a decline of 64%.

A few funds found ways to raise more than they were looking for, including Charles River Ventures, Matrix Partners and Hellman & Friedman, according to VentureBeat. But, these situations were not the norm, as most funds struggled to hit their targets or closed below desired levels. Average deal sizes fell, as well, in 2009, which could reshape investor perceptions of the private equity market for years to come.

There is a silver lining, though. Early-stage start-ups may have an easier time getting some capital to trigger some action. They don't need large amounts of capital to get moving and should have some serious success getting the financiers to play ball. Later stage companies, on the other hand, may have a tough time, as they need heftier sums to close the gap between today and liquidity event.