Venture capital firms raised less money and closed fewer U.S. funds last year, according to data from the National Venture Capital Association, a trade association. With less capital to invest, the decline from 2014 could signal an even tighter funding environment for technology startups this year.
Venture capital decreased to $28.2 billion last year, from $31.1 billion in 2014, according to the report from the NVCA and Thomson Reuters. The 235 venture capital funds that closed in 2015 represent a 13 percent decline from 2014.
While venture capitalists invested more money into private tech companies in 2015, the number of investments declined, according to research firm according to research firm CB Insights. This suggests that venture investors are chasing fewer but larger deals. Tiger Global closed a $2.5 billion venture fund in November. If the firm's recent investments in Flipkart, Ola, and Airbnb are any indication, Tiger's new fund will continue to make large bets in late-stage private companies. Some startups, facing a tougher fundraising environment, have decided to reduce spending, cut staff, and focus on turning a profit.
Venture capital firms raising their first funds represented about a third of all new funds, comparable with previous years, according to NVCA data compiled by Bloomberg. Established firms continued to account for the bulk of investments. In April, New Enterprise Associates closed the largest fund in its 38-year history, raising about $2.8 billion, along with a $350 million side vehicle for additional investments in its current portfolio.