With the recent news of Yunfeng Fund II reaching a final close on $1.1bn, Preqin’s Funds in Market online service has noted the increase of venture capital funds closing on $1bn or over, especially as the industry makes marked progress on its recovery from the financial crisis. Every year since 2011, there have been at least four venture capital funds to have closed on $1bn or more, compared to 2008, 2009 and 2010 when a total of five funds closed over $1bn over the whole of this three year period.
There have been five venture capital funds to have raised at least $1bn in 2014 YTD, with an aggregate of over $6bn. None of the funds to close were raised by first-time managers. The largest venture capital fund to have closed this year is Tiger Global Private Investment Partners VIII, managed by Tiger Global Management. The $1.5bn expansion/late stage vehicle makes investments in the internet, media and telecoms sectors across the world. It is the largest fund ever raised by the US fund manager and effectively illustrates the present strength of the venture capital market.
The most successful year for these sizeable venture capital funds was 2011, both in terms of number of vehicles closed and the aggregate capital raised. The 10 large venture capital vehicles (defined as those funds with a final close size of $1bn or more) to close in 2011 collectively raised $14bn, representing a significant 30% of all capital raised by vehicles of a venture nature closed that year. The next most fruitful year was 2012, when a total of $11bn was gathered by six funds closing over $1bn, accounting for 28% of the capital amassed by venture capital funds.
Looking at these figures it is therefore surprising to see that the largest fund to close in 2011, DST Global II, only ranks ninth on the list of largest venture capital funds to close historically. The fund that comes at the top of this list is Nanjing Jianning Zijin Equity Investment Fund I, which garnered $3.2bn in 2012. The China-focused fund targets various industries, including new materials, information, biological and new medicine, energy saving, environment protection, aviation and aerospace, high-tech services, and other emerging sectors.
There are currently four venture capital funds in market looking to raise at least $1bn each, which shows that there is great appetite for venture capital investments. The largest fund currently gathering capital is Invention Investment Fund III, a seed fund designed to back new ideas, inventions and technologies that are at a very early stage of development. If this fund reaches its $3bn target, it would be the largest seed fund ever raised.