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Alternative Market Briefing

U.S. micro venture capital fundraising momentum significantly slows down in Q1 2020

Wednesday, May 20, 2020

Laxman Pai, Opalesque Asia:

US-based micro venture capital fundraising slows in tandem with the overall market, but funds closed in Q1 2020 did so faster than recent vintages, following a record fundraising year for US-based micro venture capital funds in 2019.

According to Preqin, micro venture capital funds (sized at $100mn or less) secured just $1.1bn in the first quarter of 2020.

And with only 47 funds reaching a final close, the micro venture capital market is on track to record its lowest fundraising year since 2012, the report added.

The study undertaken by Preqin and the First Republic showed that the micro venture capital funds that did close in Q1 2020, however, did so with success.

On average, funds closed in Q1 had spent 15.3 months on the road, which reflects a significantly faster pace than recent vintages. And while the pace picked up, funds were still able to secure an average of 99% of their target size.

Since 2015, early-stage micro venture capital funds have achieved a greater average proportion of targeted close size than general micro venture capital funds. But in Q1 2020 general micro venture capital funds raised an average of 105% of targeted capital, which compares with 93% for early-stage micro venture capital funds.

General venture capital funds raised the largest amount of capital at $611mn, through 21 vehicles. Nearly the same number (20) of early-stage funds closed, but for a lower total of $360mn. There are more early-sta......................

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