Handbook of Corporate Finance Empirical Corporate Finance Volume 1

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Ch. 9: Venture Capital 487


Ta b l e 1 B
Summary statistics for venture capital fund-raising by independent venture partnerships. All dollar figures
are in millions of 1992 dollars

1991 1992 1993 1994 1995 1996 1997 1998 1999
First closing of funds
Number of funds 34 31 46 80 84 80 103 161 186
Size (millions of 1992 $) 1,483 1,950 2,480 3,582 4,045 6,805 8,060 16,933 31,299
Sources of funds
Private pension funds 25% 22% 59% 47% 38% 43% 40% 37% 9%
Public pension funds 17% 20% aaaaa10% 9%
Corporations 4% 3% 8% 9% 2% 13% 30% 18% 16%
Individuals 12% 11% 7% 12% 17% 9% 13% 11% 19%
Endowments 24% 18% 11% 21% 22% 21% 9% 8% 15%
Insurance companies/banks 6% 14% 11% 9% 18% 5% 1% 3% 11%
Foreign investors/other 12% 11% 4% 2% 3% 8% 7% 13% 22%
Independent venture partnerships as a share of the total venture poolb
80% 81% 78% 78%

Source: Compiled from the unpublished Venture Economics funds database and various issues of theVenture
Capital Journal. The numbers differ slightly from Lerner andGompers (1996)due to continuing emendations
to the funds database.
aPublic pension funds are included with private pension funds in these years.
bThis series is defined differently in different years. In some years, theVenture Capital Journalstates that
non-bank SBICs and publicly traded venture funds are included with independent venture partnerships. In
other years, these funds are counted in other categories. It is not available after 1994.

invested in new venture capital funds, individuals accounted for the largest share (32
percent). Pension funds supplied just 15 percent. Eight years later, when more than $4
billion was invested, pension funds accounted for more than half of all contributions.^1
The subsequent years saw both very good and very trying times for venture capi-
talists. On the one hand, venture capitalists backed many of the most successful high-
technology companies during the 1980s and 1990s, including Apple Computer, Cisco
Systems, Genentech, Microsoft, Netscape, and Sun Microsystems. A substantial num-
ber of service firms (including Staples, Starbucks, and TCBY) also received venture
financing.
At the same time, commitments to the venture capital industry were very uneven.
AsFigure 1andTables 1A, 1Bdepict, the annual flow of money into venture funds
increased by a factor of ten during the early 1980s, peaking at around six billion (in
2004 dollars). From 1987 through 1991, however, fundraising steadily declined. This


(^1) The annual commitments represent pledges of capital to venture funds raised in a given year. This money
is typically invested over three to five years starting in the year the fund is formed.

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